Despite political turmoil due to the hung parliament which came out of the most recent elections, Italy managed to meet the high part range of its target range in Wednesday morning's sovereign debt auctions.

The Italian Treasury sold a total of €6.5bn in public debt compared to the objective of €4-6.5bn.

Italy sold €2.5bn in BTPs with maturity in 2017 although at a higher yield of 3.59% compared to the prior 2.94%.

However demand, measured by the bid-to-cover ratio, also increased to 1.61 from the previous 1.3.

The yield on the €4bn in 2023 BTPs hit 4.83%, its highest level since October 30th with a bid-to-cover ratio of 1.65.

According to Dr. Luca Cazzulani, Deputy Head of fixed income strategy at Unicredit: "The test shows that demand for BTPs (long-term Italian debt) remains healthy, with investors attracted by the current yield levels."

JM

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