All indicators suggested that yesterday Europe would see another bullish trading session. No macroeconomic data were expected from the Old Continent or the United States, so the only thing investors were keying on to decide whether to buy or sell was the Italian Treasury's two debt issues. Even though the issue was more than positive, it was not enough to calm markets and investor skepticism. Across the market there were sell-offs of not only bonds, but stocks as well.
But let?s break this down. Italy has met its objective by raising 11.5 billion euros in near-term debt (six-month notes and two-year bonds), an equivalent to how much capital has fled the country during the past year, according to the Guardia di Finanzas, the Italian law enforcement agency under the authority of the Minister of Economy and Finance.
Italy got what they wanted and did so paying up to 50% less than expected and receiving greater demand compared to previous issues of this kind. Specifically, they sold 9 billion euros in six-month notes at an interest rate of 3.25%. This is half of the 6.5% that it had to offer in November for the same kind of debt. As for two-year bonds, they were offered at a 38% discount compared to earlier issues.
