MILAN – Italy has easily sold €7.75 billion ($10 billion) in 12-month bonds, though at slightly higher interest rates, in the first test of market sentiment since Fitch downgraded its rating due to political uncertainty.
In Tuesday’s auction, Italy paid 1.28 per cent interest on the debt, up from 1.09 per cent in the last such auction a month earlier. Demand was stronger than in February, however, at 1.5 times the amount on offer.
Italy’s national elections last month ended with no clear winners, raising concern the country could lack leadership through its financial crisis. Talks on forming a new government are set to begin March 20, after Parliament convenes for the first time Friday and elects presidents of both houses.
Fitch Ratings Agency downgraded Italy’s sovereign debt on Friday, citing the election results.