29 Dec 2011

Borrowing costs now lower for Italy

5:44 am on 29 December 2011

The cost of borrowing for the Italian government fell sharply at its latest debt auction.

The government raised 9 billion euros ($US11.8 billion) in short-term debt at half its previous interest rate.

The interest on the six-month bills was 3.251%, down from 6.504% at the last similar auction in November.

The auction follows an extension of 489 billion euros in three-year loans to eurozone banks by the European Central Bank last week.

Also on Wednesday, Italy raised a further 1.7 billion euros in two-year debt at an interest rate of 4.85%, down from 7.81% last month.

The auctions follow the introduction of further austerity measures and other reforms in Italy by the government of economist Mario Monti, which have reassured the markets.