Italian yields climb as Spain downgrade fuels peripheral fears

Italy sold €5.95bn worth of bonds today after Standard & Poor's downgrade of Spain reignited fears over the health of European peripheral economies.

The Italian Treasury sold the 10-year bonds at a rate of 5.84%, up from 5.24% at the previous auction on 29 March. The bid-to-cover ratio totalled 1.48 times the amount offered, down from 1.65 last month. Five-year notes were sold at a yield of 4.86% compared with 4.18% at the previous auction. Spain downgraded Spain's rating by two levels to BBB+ yesterday over concerns that the country was not doing enough to rescue its banks, weakening Italian bond levels as they went into the auction. Spanish yields soared to over 6% earlier this month, as fears Europe's fourth largest economy ...