Spain and Italy successfully sold about €22bn of government debt at sharply lower costs than at previous auctions, easing tensions in financial markets and underlining the tentative improvement in investor sentiment towards the eurozone, reports the FT. Spain’s auction was particularly successful, selling almost €10bn of new bonds maturing in 2015 and 2016, twice the maximum target set for the sale and at much lower rates than at the last auction of comparable bonds, in one swoop taking away almost a third of the country’s estimated €36bn borrowing requirements this year. FT Alphaville looks at a Credit Suisse note pointing out that Spain’s gross financing for the year is €90bn. Italy sold €8.5bn of one-year bills, at an average yield of 2.74 per cent, less than half the cost incurred when Italy last sold similar bills in mid-December. Italy will follow up its bill sale with a bond sale for up to €4.75bn on Friday, which will be keenly watched following the success of Thursday auctions. The ECB said on Thursday there were “tentative” signs of economic stabilisation in the eurozone as successful Spanish and Italian government bond auctions also pointed to at least a temporary easing of the region’s debt crisis, the FT reports. Although Mario Draghi, ECB president, tempered his cautiously optimistic tone by saying that financial market tensions continued to hit eurozone economic activity, markets reacted positively to his comments and the bond auctions, with the euro gaining against the US dollar. The WSJ says Mr Draghi dismissed speculation that banks are simply depositing the money they borrowed from the ECB back at the central bank, despite deposits at the ECB soaring to record highs.
ft.com/alphaville All times are London time