Investors showed they had more faith in Italy managing its debts than troubled Spain at an auction today.
They snapped up Italian bonds at some of the lowest interest rates in more than a year.
Spanish 10 year government bond yields are rising back toward unsustainable levels around 7%.
But Italy paid just 4.09% to borrow €2.7 billion over five years today compared with 4.73% at the end of August.
That was the lowest yield since May 2011, before Italy was sucked in the euro zone's debt crisis, and brought its total borrowing this year to around 80% of its financing needs.
It also sold €2.93 billion of 10-year bonds maturing in 2022 at 5.24% from 5.82% as well as €1 billion of floating rate notes.
Despite political risks heaving over the horizon, Italy is now regarded as less of a hot spot in the euro zone crisis than Spain, which faces a combination of popular, regional and market pressure to seek more support from the rest of the EU.
The sale came in a week that has seen optimism on European markets evaporate on concerns that Spain was stalling on asking for an aid deal that it was hoped could shore up the euro zone and prevent the debt crisis from spreading.
On Italy, analysts point to risks that an election next year will generate a government that is far less. They said the bulk of the demand in today's auction had come from domestic buyers, who hold two-thirds of Italian government debt.
However the head of the debt management office said there had been a pick-up in foreign interest for Italian paper since the beginning of September, when the European Central Bank detailed a bond-buying scheme for weaker euro zone states.
Italy has managed to sell €21 billion at three regular auctions this week, paying lower yields, but it faces a redemption hump next month when a total of €37 billion in short and long-dated paper come due.
That is one of the reasons why the Treasury has launched a new BTP Italia bond aimed at retail investors to be sold in mid-October.
