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Italy pays higher borrowing rates in pair of bond auctions as investor jitters return
MILAN (AP) ' Italy was forced to pay higher interest rates Friday to entice investors to buy a little under '5 billion ($6.6 billion) worth of its 5- and 10-year bonds as jitters over Europe's debt problems have resurfaced.
Investors demanded yields of 5.84 percent on the 10 year-bonds, compared with 5.24 percent last month. On the 5-year bonds, Italy paid 4.86 percent, up from 4.18 percent. The Treasury raised '4.9 billion, with the demand for both bonds below last month's.
Concerns over Europe's debt crisis have swelled over recent weeks as France goes to the polls, Spain struggles with its debts and Italy acknowledged that it won't balance its budget until 2015, instead of 2013 as pledged.
Italian Premier Mario Monti, who took office in November as the head of a government of technocrats to confront the debt crisis, said Thursday that budget cuts with structural reforms alone "will never deliver growth."
"If there is not demand, the reforms are useless and there will be no growth," he said.
On Friday, in a joint statement with EU Commissioner Jose Manuel Barroso, Monti affirmed that growth must come from "improving competitiveness and not through higher levels of debt."
Following a meeting in Brussels, the pair said austerity measures need to be paired with "targeted investments to enhance competitiveness" while helping to increase consumer demand.