Italian bond yields dipped near record lows today as Rome drew strong demand from retail investors at its sale of a new inflation-linked bond.

Italian debt was also buoyed by speculation that peripheral euro zone government debt will benefit from any future asset-buying programme by the European Central Bank.

Bids placed for Italy’s BTP Italia sale came to €6.7 billion on Monday alone - nearly half of the €15 billion analysts expected Rome to raise over the course of the four-day sale. In another positive sign, Bank of Italy data showed foreign holdings of Italian debt are on the rise.

Italian 10-year yields opened 1 basis point lower at 3.17 per cent, just off the record lows of 3.14 per cent hit last week.

Bank of Italy data showed on Monday that foreign holdings of Italian bonds rose by €29 billion in January alone to €648 billion. Italy is gearing up to issue a new 15-year bond to take advantage of rising demand from international investors, Reuters reported last month.

Elsewhere in the periphery, Spanish 10-year yields were unchanged on the day at 3.15 per cent, while Portuguese and Greek bonds were both 1 basis points tighter at 3.93 per cent and 6.42 per cent, respectively.

Reuters