Italy pays lower interest rate in bond sale

AP News
Posted: Aug 28, 2012 7:07 AM
Italy pays lower interest rate in bond sale

ROME (AP) — Italy has paid sharply lower interest rates to sell €3.75 billion ($4.7 billion) in treasury bonds, a confirmation that investor confidence in the country has improved in recent weeks.

Bank of Italy said Tuesday it sold five-year bonds at a 3.69 percent rate, down from 5.20 percent at the last such auction. It sold ten-year bonds at 4.39 percent, down from 5.96 percent.

Demand was 2.34 times the amount on offer for the five-year bonds and 2.65 times for the 10-year bonds. Bank of Italy also sold two-year debt, with demand 1.95 times the offer.

Confidence in heavily-indebted countries like Italy and Spain has grown since early August, when the European Central Bank said it was considering a plan to buy those countries' government bonds and reduce their borrowing rates.