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Italian costs of funding soar at auction, rate hike bets high

·1-min read

MILAN (Reuters) - Italian borrowing costs climbed to new multi-year highs at an auction on Tuesday as euro zone money markets priced a roughly 50% chance of a 75 basis-point European Central Bank rate hike in September.

The Treasury sold the top planned amount of 8 billion euros ($8.03 billion) over four bonds, a 5-year BTP, a 10-year BTP, an off-the-run BTP and a floating rate CCTeu.

Rome sold 3.25 billion euros of a BTP maturing Dec. 1, 2027 at a 3.09% gross yield - the highest level since September 2013 - versus 2.82% at the previous auction.

It placed 2.25 billion euros of a 10-year BTP with a Dec. 1, 2032 maturity fetching a 3.76% gross yield - a record since January 2014 - compared with 3.46% at the end of July.

The Treasury also assigned 1.25 billion euros of a 7-year floating rate CCTeu note due Oct. 15, 2030 at a yield of 1.04% and an off-the-run BTP maturing March 1, 2030 at a yield of 3.30%.

($1 = 0.9967 euros)

(Reporting by Alessia Pé, editing by Agnieszka Flak)