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Michel Euler/AP

Italy heads for bailout territory after awful bond auction

Italy raises €10bn in two short-term auctions – but sees its interest rates go through the roof, and into unsustainable levels.

THE ITALIAN GOVERNMENT has been pushed closer than ever to requiring emergency funding from the EU and IMF this morning, after two separate bond auctions saw its cost of borrowing rise to unprecedented levels.

The treasury raised €10bn through the auction of two different bonds, but was forced to agree huge interest rates in order to do so – sending the price of borrowing on more long-term borrowing to their highest levels of the euro era.

Most of the cash – some €8bn – was raised through the issue of six-month bonds, on which the treasury was forced to pay 6.504 per cent interest – up from just 3.535 per cent on the last similar auction.

The other €2bn was raised in the sale of bonds maturing in two years’ time – which now fetch an all-time record of 7.814 per cent, up from 4.628 per cent the last time similar bonds were sold.

The levels are universally considered unsustainable – and have sent the yield on 10-year bonds, which are sold second-hand elsewhere, up to 7.33 per cent: close to their all-time high set two weeks ago.

The events put further pressure on Italy, which requires low interest rates in order to keep on top of its €1.9 trillion mountain of national debt.

Euro bond plan includes giving EU ‘extensive intrusive power’

Barroso: More integration needed to address ‘greatest crisis in EU history’

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12 Comments
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    Mute Shane Walsh
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    May 24th 2012, 9:18 AM

    Not good at all! I look forward to the day when we start seeing these major corporations taking on people rather than letting them go.

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    Mute mcbab
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    May 24th 2012, 9:26 AM

    Did you not hear the announcement from Intel about their expansion? Take note Journal.ie.

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    Mute Diarmaid Twomey
    Favourite Diarmaid Twomey
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    May 24th 2012, 9:58 AM

    Just remember folks these are the same guys urging a yes vote, who ll cut jobs here and drop us in an instant just to save a few cent. NOT the type of people whose opinion should be trusted on sovereign affairs! Deeply sad news, let’s hope the loss of jobs here is small.

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    Mute Peter
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    May 24th 2012, 11:21 AM

    This is just to do with supply and demand, HP is going down as it has not diversified to meet the competition.. The saved money may be invested back into the company and hopefully improve it..

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    Mute Diarmaid Twomey
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    May 24th 2012, 12:20 PM

    So would it be fair to say that supply and demand will remain the same regardless of whether we are on board this packed metaphorical train? If that’s the case, and as you point out below, Irelands democratic wish won’t make a blind bit of notice to FDI investment and retraction in Ireland? More spoof so from Yes side?

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    Mute Peter
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    May 24th 2012, 3:03 PM

    Well your right there about FDI whether we vote yes or no, no difference,

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    Mute Siobhan Shove On Lynch
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    May 24th 2012, 11:19 AM

    There “hiring” alright, 40+ hrs a week for unpaid “work experience”.

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    Mute Jason Moore
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    May 24th 2012, 5:27 PM

    Jesus can we have one story were someone doesn’t bring up the stability treaty or government.

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    Mute Patrick Moran
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    May 24th 2012, 9:27 AM

    This is bad news. But am I crazy or did I recently read somewhere that HP were actually taking on staff ??

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    Mute Virgil Sollozzo
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    May 24th 2012, 9:55 AM

    They seem to hire a lot of their engineers etc through a independent subsidiary called HP CDS this allows them to offer lower terms and less benefits as opposed to normal HP engineers.

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    Mute Tomas O Beag
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    May 24th 2012, 11:30 AM

    Stability !!!! Yeah right.

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    Mute Peter
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    May 24th 2012, 12:07 PM

    This has nothing to do with the treaty.. If industry X goes bust it’s because of the market shifts

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