MILAN: Italy's bond yields fell at auction on Tuesday as a local election defeat for the anti-establishment 5-Star Movement, and the failure of a bid to bring forward national elections eased political concerns.
Italy paid the lowest yields since January to sell three- and seven-year bonds, raising a total of 5.5 billion euros, at the top of its planned issue range.
A nominal bond due in June 2020 fetched a gross 0.15 percent yield, down from 0.37 percent a month ago. Demand totalled 1.5 times the 2.5 billion euros sold.
A May 2024 bond drew demand for nearly 1.4 times the 3 billion euros placed. The yield fell to 1.35 percent, from 1.65 percent at the previous auction in mid-May.
Investors took heart from easing political risks in Europe after Italy's 5-Star Movement lost ground to traditional parties in local elections on Sunday and a French parliamentary vote looked set to hand President Emmanuel Macron a strong majority to push through pro-business reforms.
Italian bonds suffered at the beginning of last week due to the prospect of an early election in the autumn, only to rally strongly on Friday when mainstream parties failed to agree on a new electoral law which is necessary to bring forward the vote.
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