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Italy Sells Maximum Amount at Zero-Coupon, Linkers Auction

By Chiara Vasarri
April 24, 2014 6:06 AM EDT

Italy sold the maximum amount at a bond auction today on bets the European Central Bank will take further action to combat low inflation.

Italy sold a total of 5 billion euros ($6.9 billion) of debt, with the yield on a new April 2016 zero-coupon note rising to 0.786 percent from 0.707 percent at the previous sale of a similar security March 26.

The ECB would need to increase the level of monetary accommodation if the medium-term outlook for inflation threatens to derail a recovery, President Mario Draghi said in a speech in Amsterdam today. Euro-area inflation dropped to 0.5 percent in March, the slowest rate in more than four years, compared with the central bank’s goal of just under 2 percent.

Investors bid for 1.47 times the amount of the 2016 Italian debt sold, down from 2.02 at the previous sale.

The yield on Italian 10-year (GBTPGR10) bonds was up two basis points to 3.11 percent at 11:27 a.m. Rome time, pushing the difference with comparable German Bunds to 158 basis points.

The Rome-based Treasury also sold 975 million euros of 2024 and 525 million euros of 2026 inflation-linked notes at 1.92 and 2.09 percent respectively.

Investors bid for 1.80 times the amount of the 2024 debt sold and for 2.46 that of the 2026. The Rome-based Treasury returns to the market April 28 with the sale of 7 billion euros of 184-day bills.

To contact the reporter on this story: Chiara Vasarri in Rome at cvasarri@bloomberg.net

To contact the editors responsible for this story: Jerrold Colten at jcolten@bloomberg.net Alessandra Migliaccio

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