Milan - Italy's three-year debt costs fell below 5% at the country's first longer-term bond sale of the year on Friday but demand failed to live up to the success of a Spanish sale the previous day, pointing to challenges ahead as Rome tackles a heavy refinancing load in the next few months.Italy raised the maximum planned amount of €4.75bn (£3bn) at the sale but failed to match interest at the Spanish auction where Madrid sold €10bn of bonds, or twice the planned amount on Thursday, thanks to strong domestic appetite fuelled by cheap European Central Bank (ECB) funds."On the whole the auction results are mixed to soft, certainly far from the humdinger we saw in Spain yesterday," said Richard McGuire, strategist at Rabonbank in London."This will serve to dampen some of the market's enthusiasm in the wake of yesterday's Spanish auction... It doesn't defeat the notion that the ECB extraordinary liquidity provisioning will support peripheral debt but it perhaps tempers expectations as to what degree these operations will support," he said.Italy sold its November 2014 three-year benchmark bond at an average rate of 4.83% on Friday, down sharply from a 5.62 yield at an auction just two weeks ago.It was the lowest yield at a three-year auction since September last year but the bid-to-cover ratio fell to about 1.22, versus an already weak 1.36 ratio at the end-December sale.The end-December three-year sale was the first bond auction after the ECB's unprecedented injection of three-year funds and yields fell from a record of nearly 8% seen in November at the height of the debt crisis.Rome also sold two off-the-run issues on Friday, due in July 2014 and August 2018.The ECB's liquidity boost, evident also at an Italian bill sale on Thursday where one-year yields more than halved, has boosted market sentiment on the two countries at the fore of the eurozone debt crisis, driving Italian yields sharply lower on the secondary market.But sentiment remains fragile, with investors well aware that Rome faces a challenging funding task in 2012.With ECB support limited to shorter-end maturities, longer-dated Italian bonds remain vulnerable and attention will soon turn to tougher five- and 10-year Italian sales scheduled for January 30."Looking beyond this one auction, the issuance challenge for Italy remains significant. Market pressures are most apparent in the 10-yr sector of the curve which will face supply in two weeks time," Citi analysts wrote in a research note.About €90bn of Italian bonds are due to mature between February and April - more than Spain's target of €86bn of medium- and long-term issuance in the whole of 2012.