Italian Sovereign

Spain sold €3.9bn of short dated debt on Tuesday, surpassing its maximum volume target. This was despite peripheral sovereign yields spiking on Monday after Italian premier, Mario Monti, announced at the weekend his intention to resign.

Italian and Spanish auctions this week will record subdued demand and heightened yields after news broke over the weekend that Italy’s prime minister, Mario Monti, is to stand down, said analysts.

The Republic of Italy’s 10 year borrowing costs plunged to the lowest levels seen at auction in two years at a debt sale on Thursday morning, where the sovereign all but polished off its funding for 2012.

Demand was buoyant for auctions of Italian and Spanish paper on Tuesday, after European politicians agreed a conditional deal in the small hours of that morning to ease Greece’s debt burden.

Italy is looking to build on a strong performance over the past few months by launching a new syndicated 15 year euro benchmark next year, SSA Markets can reveal.

Cassa Depositi e Prestiti (CDP) has added to a record breaking year in private placements with its largest deal since March.

Spain remained square in the harsh glare of investor sell offs on Tuesday as fellow peripheral eurozone strugglers Greece and Italy comfortably raised more than €10bn in short term debt.

Italy provided the glamour at the end of a bumper week for the Eurozone periphery as it sold the largest bond of all time and attracted a heavy dose of international demand.

Peripheral eurozone sovereigns raised nearly €30bn this week across a range of maturities amid a surge in demand based on pepped up hopes of a Spanish bail-out.

The Republic of Italy provided some positive news ahead of a busy week for periphery eurozone countries, as its third BTP Italia bond attracted more interest in a few hours on Monday than the previous issue did over four days.

The Republic of Italy’s near term funding prospects are looking brighter as a €30bn cut in its 2013 funding needs and better than expected production data boosted sentiment for the sovereign, analysts told SSA Markets.

Italy demonstrated a command of investor confidence on Thursday morning with a strong auction performance that saw issuance near the upper end of the targeted range and at yields considerably through where the same debt had been issued in August.