Italy pays lower rates in bond sale

Italy paid sharply lower borrowing rates in a 9.5-billion-euro ($12.9 billion) bond issue Tuesday, the Bank of Italy said, despite a series of recent credit rating downgrades for the struggling country. In the auction, Italy sold 7.0 billion euros in 12-month bonds at a rate of 3.57 percent, down from 4.153 percent during a similar operation last month, the Bank of Italy said. In the sale, Italy also issued 2.5 billion euros in treasury bonds set to mature within 74 days, with rates at 1.735 percent. Demand was 20.75 billion euros in the sale allowing Italy to easily reach its target. On Friday, Fitch rating agency downgraded Italy by one notch, following downgrades by Moody's and Standard & Poor's. Cyril Regnat, a bond strategist with Natixis bank, said Italy was profiting from "a drop off in risk aversion globally" in paying lower interest rates despite its economic troubles.