Italy pays record-low yields on 5-10 year bonds auction

Italy paid record-low yields to sell 5-10 year debt on Wednesday at the first auction of these maturities held after the European Central Bank cut interest rates and expanded its stimulus measures this month.

The treasury raised the top planned amount of 8 billion euros ($9 billion) selling three bonds, including a new 5-year issue, in a market buoyed by dovish comments from Federal Reserve Chair Janet Yellen.

The new bond, maturing in June 2021, fetched a 0.34 pct yield, down from 0.44 pct. The bid-to-cover fell to 1.4 from 1.5 times at the smaller February auction where the previous 5-year benchmark, maturing in November 2020, was sold.

The treasury placed a 10-year bond due in June 2026 at 1.24 pct, sharply down from the 1.50 pct yield it paid at the end of February. The bid-to-cover rose to 1.4 from 1.3 times at the bigger previous auction.

In addition, Italy also sold floating-rate certificates maturing in December 2022 at a gross yield of 0.44 pct compared with 0.58 pct a month ago. The bid-to-cover was broadly unchanged at around 1.6 times.