The Italian Treasury sold as much as 567 million euros of inflation-related bonds with yields rising above 7.0% for the second time this week, which could lead the country to follow Greece, Ireland and Portugal in seeking bailouts.
Italy failed to meet the sale-target of 750 million euros, as yields surged to 7.3%, while demand was 2.16 times for the bonds maturing in September 2023. Italy will be put under test again tomorrow, as the nation is set to sell as much as 8.0 billion euros at three different maturities including 10-year bonds.
The Italian borrowing costs climbed to the highest record seen in 14 years, which added to concerns that the new Prime minister, Mario Monti could be unable to control the second largest debt in the euro-area region worth 1.9 trillion euros, which in result threatens the entire one currency union.
The Italian Primer is to prepare additional budget cuts in order to control the heavy load of debt the country handles, in attempts to bring Italy back on the track and support growth to expand and the pace of recovery to revive.