Italy’s 10-year borrowing costs dropped below 5.5 per cent at auction yesterday as support from domestic banks helped Italy sell €8 billion of medium- and long-term bonds, near the top of its target range.

Italy paid 5.24 per cent to sell 10-year paper, the lowest level since August.

The sale was covered 1.65 times, up from 1.4 times a month ago, when the rate had been 5.5 per cent.

At 4.18 per cent – broadly unchanged from a month ago – five-year borrowing costs stabilised at their lowest level since last May.

After a recent wave of profit-taking, investors were keen to assess the strength of demand for Italian debt at auction. Rome’s third debt-sale this week comes after a solid bill auction on Wednesday and a smaller bond sale on Tuesday. – (Reuters)