Italy's borrowing costs fall at auction on rising rate cut bets

Italian borrowing costs fell to a more than two-year low at an auction on Friday as investors' expectations that the European Central Bank could cut interest rates in October keep rising.

The Rome-based Treasury sold the top planned amount of 8.75 billion euros ($9.75 billion) over four bonds.

It allotted 3.5 billion euros in a 10-year BTP bond due February 1, 2035 with a 3.43 per cent yield, down from 3.68 per cent touched at end-August auction. It was the lowest level since May 2022.

It placed 2.5 billion euros in the tap of a 5-year BTP maturing on October 1, 2029 fetching a 2.76 per cent gross yield, the lowest since June 2022, compared with 3.08 per cent in the previous auction.

The Treasury also placed 1 billion euros in a BTP due August 1, 2029 and 1.75 billion euros in a CctEu bond maturing on October 15, 2030, with yields respectively at 2.68 per cent and 4.68 per cent.