Italy upbeat at end of 2012 after year of market tension

The Treasury's borrowing rates were slightly higher at short, medium and long-term debt auctions last week, but were well below levels seen at the end of 2011, when Prime Minister Mario Monti took over from Silvio Berlusconi as Italy teetered on the brink amid the eurozone debt crisis.

In late November 2011, the country was paying a 7.56-percent rate for its benchmark 10-year bonds, sparking widespread concerns it might have to ask for a bailout.

On Friday, that rate stood at 4.48 percent.

As 2012 draws to a close, “even if public debt has breached the 2-trillion-euros mark, Italy's ability to finance itself is no longer in doubt,” said Enrico Marro in Italy's Il Sole 24 Ore financial daily.

“For 2013, optimism reigns,” he concluded.

The turnaround is principally the result of two factors: the European Central Bank's promise to buy sovereign debt issued by eurozone member states without limit if necessary if they meet certain strict conditions, and Monti's decisive reforms which have restored Italy's credibility internationally.

Experts have forecast a couple of months of volatility on the markets in the lead up to the Feb. 24 and 25 elections, but the worst appears to be over.

Italian bank Intesa Sanpaolo said “the fever should drop off in 2013 compared with 2012.”

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