Debt: sign of relief in Italy after a bond test

Italy, again under pressure from the markets these days, managed to refinance a portion of Wednesday’s massive debt at rates much lower than before, good news for the government Monti, who after an austerity wants boost growth.
The Italian Treasury has set for 9 billion euros of debt securities over six months at a rate of 3.251%, two times lower than during a similar operation dating from November 25 (6.504%).
Proof that this was good news for operators, the stock market gained more than 1.2% at midday is now above the symbolic threshold of 15,000 points. The rates of government bonds to ten years were also marked down to 10:45 GMT to 6.732% against 6.943% yesterday, after even came close to 7% on Tuesday.
For another issue of Treasury certificates (CTZ) to two years, rates have also declined sharply to 4.853% against 7.814% in the last issue similar dating from late November.
“This is great news not only demand was to go, but yields fell violently,” said Cyril Regnat, bond strategist at Natixis.
For Luca Cazzulani of Unicredit, “it is possible that the liquidity provided by the ECB (European banks at a very low rate of 1% over three years) support the request.”
Italy, the third largest economy in the euro area, is the latest European country to have to borrow more bonds in the market by 31 December. Another test program is scheduled for Thursday with the award of 5 to 8,000,000,000 euros of bonds 3, 9 and 10 years.
The low trading volumes year-end and renewed skepticism regarding markets of Italy and its colossal debt (1,900 billion euros, 120% of GDP) had feared a new outbreak Italian fever rates.
Before replacing Silvio Berlusconi by the technocrat Mario Monti on November 16, the 10-year rate had reached almost 7%, a level that was unsustainable fear of default of the Italian State.
According to the Corriere della Sera, after 430 billion of government bonds this year, Italy will have to find 450 billion euros in 2012, half in the first four months of the year, a challenge.
“The Italian debt will represent a significant portion of emissions (provided) in the euro zone and the ECB (European Central Bank) will have to increase its purchases of bonds” to help them refinance, told AFP Neil MacKinnon economist of the bank VTB Capital.come from
For Ugo Bertone, an analyst renowned Italian financial site, “the first quarter of 2012 will be decisive for the survival of the euro as a great battle will be conducted on the foreheads of Italian bonds.”
Experts say the rise in interest rates in Italy in recent days reflected concerns about the recessionary impact of anti-crisis plan adopted by Mr. Monti before Christmas.
Italy is expected to contract 0.4% of GDP in 2012 while she has one foot in recession after a fall of O, 2% of GDP in the third quarter.
The government has promised an offensive against-fast, which could start to take shape during a cabinet meeting scheduled for Wednesday afternoon.
The meeting should be used, according to Italian media, establish a schedule of actions for the coming months to stimulate an economy that is growing sluggish under 1% per year for 10 years.
Monti would liberalize sectors such as taxis and pharmacies and more flexible labor market legislation, but had to stop because of an outcry from category associations and unions.
To reduce the debt once from 100 to 150 billion euros, the government planned to sell as quickly prestige property and interests in public companies.

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