Spread jumps to 252 basis points with Germany
Concerns over Italian government stability pushes up bond rates26 September, 18:11
The BTP-Bund spread widened to 252 basis points, up from its close on Wednesday at 241 basis points. The yield on 10-year Italian paper edged up to 4.31% near close of trading on Thursday.
The widening occurred despite a successful Italian government bond auction earlier Thursday, when the interest rate on six-month Italian BOT bonds dropped to their lowest level since May.
The Treasury sold 8.5 billion euros' worth of BOTs at an average interest rate of 0.781% early in the day, compared to 0.886% at a sale in August. The last time the rate was lower was in May, when it was 0.538%. Investors may have been rattled when lawmakers from Silvio Berlusconi's Forza Italia (FI) party threatened to quit en masse.
Sources say Premier Enrico Letta is preparing for talks with all political parties involved in his coalition.
FI members of the Lower House and Senate started signing their resignations and giving them to their respective whips on Thursday after agreeing Wednesday to quit if a Senate panel next week votes to strip Berlusconi of his parliamentary seat after a tax-fraud conviction was upheld by the supreme court.