THE COST OF financing Italian government debt has fallen today, after the country won a favourable response to its latest auction of three-year bonds.
In a rare piece of good news for the eurozone, the average yield of €4.75billion worth of bonds in the auction fell to 4.83 per cent, according to Reuters.
Italy’s government debt, which currently stands at almost 120 per cent of GDP, is seen as one of the most serious threats to the integrity of the eurozone.
Because the country’s economy is so large, it is not clear that EU bailout funds have the capacity to step in if Italy becomes unable to source funding on the international markets.
The news from today’s auction also helped Italian ten-year bond yields fall to 6.54 per cent, below the seven per cent widely seen as the point beyond which financing debt becomes unsustainable.