Italian rates sharply down in EUR 8.5 bn bond sale

(MILAN) - Italian borrowing rates dropped sharply on Thursday in the Treasury's first bond sale of 2013, which raised 8.5 billion euros ($11.1 billion) in short-term paper.

The rate on 12-month bonds fell to 0.86 percent from 1.45 percent at the last similar operation in December, the Bank of Italy said.

According to Dow Jones, it is the lowest rate paid for the past three years.

Economic observers had forecast an easy sale, particularly because, for investors, "the year has started in strong risk-on mode."

"This, coupled with the ongoing appetite for Italian paper, should support the performance of short-term Italian paper," Luca Cazzulani, UniCredit analyst, said in a note.