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Italy 2-yr debt costs hit five-month low at auction

Monday, 28 Oct 2013 | 6:21 AM ET

MILAN, Oct 28 (Reuters) - Italy's two-year yields hit a new low since May at an auction of zero-coupon bonds on Monday as expectations liquidity will remain abundant both in Europe and the United States supported short maturities.

Italy sold 2.25 billion euros of its June 2015 zero-coupon bond, at an average 1.392 percent yield, down from 1.623 percent at a previous auction in late September. The sale was covered 1.8 times, in line with a month ago.

Italy also sold 750 million euros of an inflation-linked bond due in September 2023 on Monday, raising the top planned amount of 3.0 billion euros in bonds.

The inflation-linked bond fetched a yield of 2.73 percent, compared with 3.3 percent at the previous sale in August. The bid-to-cover stood at 1.8, down from 3.2 previously.

(Reporting by Valentina Za, editing by Silvia Aloisi)