Italy managed to sell 10 billion euros’ ($13.2 billion) worth of sovereign bonds on Friday in an “awful” auction, but that’s about the only good thing that can be said about the event, according to experts. The unsustainable interest rate the country had to offer to execute the sales hit yet another record, piling on worries about the future of the eurozone and its escalating debt crisis.
According to a Reuters report, despite the fact that the European Central Bank bought Rome’s bonds as well, the yield on two-year BTP bonds topped 8%. Padhraic Garvey, rate strategist with Dutch bank ING in Amsterdam, was quoted saying, “The pricing is awful. “The object of the exercise this morning was to get the job done and they’ve done that, but that’s about the only positive thing to say.”
A month ago, the auction yield on six-month bills was 3.5%; the same bonds Friday sold for a yield of 6.5%. Italian stocks and the euro both reflected investor concerns, falling after the auction. Short-term yields for Italian securities are all now well above the 7% level considered unsustainable, coming in between 7.35% and 8%.