Italy sold €6 billion (Dh29.16 billion) of bonds, meeting its target, as borrowing costs on its benchmark debt fell to the lowest since March even after the nation was downgraded by Moody's Investors Service. The Treasury sold €4 billion of benchmark sec-urities due in November 2014 to yield 3.41 per cent, down from 4.83 per cent at the last auction of similar-maturity bonds on January 13. Investors bid for 1.4 times the amount offered for the 2014 bonds, up from 1.22 times in January. The Rome-based Treasury also sold a total of €2 billion of bonds due in 2015 and 2017 to yield 3.77 per cent and 4.26 per cent respectively. Italy's borrowing costs have been falling as Prime Minister Mario Monti takes steps to spur the economic growth needed to reduce the euro-region's second biggest debt and amid European Central Bank (ECB) lending to the region's bank that is shoring up demand for government bonds. Monti's government passed €20 billion of budget cuts and tax increases in December to balance the budget in 2013. It followed last month with measures to spur competition and reduce bureaucracy. Annalisa Piazza, a fixed- income analyst at Newedge Group in London, said in a note published after the auction: "All lines were well absorbed, despite last night's downgrade by Moody's that in our view was somehow expected." Funding needs Italian bonds gained Tuesday, with the 10-year yield falling two basis points to 5.58 per cent in Rome. The extra yield investors demand to hold the securities instead of benchmark German debt fell four basis points to 3.62 percentage points. Italy, which needs to sell about €450 billion of debt this year, auctioned €12 billion in bills yesterday and rates on the one-year debt fell to the lowest since June. Borrowing costs dropped even after Moody's lowered Italy's rating to A3 from A2, citing a weak outlook and possible funding shocks for sovereigns and banks. Five other European nations were also downgraded. Moody's action came after Fitch Ratings and Standard and Poor's lowered the country's credit rating last month. Italian bond yields have fallen since those downgrades.