Italian Sovereign

Italy’s borrowing costs rose at both ends of the curve at auction on Thursday, although it pulled in healthy demand to a new three year line and hit its maximum volume target.

Italy’s one year borrowing costs rose to their highest level this year at an auction on Wednesday, ahead of a longer dated debt sale a day later.

Italy found demand at the ultra long part of the curve and Spain scored its lowest 10 year borrowing cost in three years mid-week, as fears over potential military action in Syria and a reduction in US central bank liquidity support failed to derail the eurozone periphery’s journey back to capital market normalcy.

Italy will opt for a eurozone inflation linked trade if it comes back with another syndication this year, SSA Markets can reveal, although the well-funded issuer could rely on its auction programme until the new year.

Italy made a solid start to three days of auctions on Tuesday, as yields and demand for its two year zero coupon bonds remained steady despite the latest round of political turbulence from the country.

As European sovereigns gear up for a busy period of auctions in late August and September, here are the latest funding figures for selected issuers.

Germany’s 10 year borrowing costs rose to their highest level in 18 months at an auction on Wednesday, as better than expected economic data gave investors to switch out of the eurozone’s safest assets and into the periphery.

Italy’s 12 month borrowing costs dropped for the first time since May at an auction on Monday, as redemption flow of €8.2bn helped the sovereign comfortably place €7.5bn of debt.

Italy attracted healthy demand and lowered its funding costs at an auction of medium to long term debt on Tuesday, despite the sale being held against the backdrop of a supreme court appeal hearing that analysts warned could destabilise the country’s coalition government.

Italy breezed through a short dated debt auction on Monday ahead of the launch of a new 10 year line later in the week. The strong showing came in spite of concerns that the stability of the sovereign’s coalition government could be rocked by the result of a supreme court appeal hearing on Tuesday involving Silvio Berlusconi, the leader of one of the government coalition parties.

France, Germany and Spain held well received auctions of medium to long term debt this week. Here is a round-up of key European sovereigns' funding figures.

Italy suffered a slight setback at an auction on Thursday when it sold three year debt at a yield higher than where the bonds were trading in secondaries.