roger that怎么来的:Italian Bond Risk Keeps Bubbling Away .

By RICHARD BARLEY

When it comes to Italy, the water may not be boiling, but it remains dangerously hot.

Auctions this week of Italian government debt have offered a mixed picture of where Europe's debt crisis stands going into the New Year. On the plus side, Italy raised 16 billion euros ($21 billion) of cash in two days at lower yields than at previous sales. But enthusiasm should be tempered by the fact that Italy's cost of borrowing remains perilously high, and the European Central Bank was forced Thursday to buy Italian bonds to stem a post-auction selloff.

With Italy seeking to sell a massive 440 billion euros of bills and bonds in 2012, the danger remains of a sudden stop in financing.

Wednesday's bill auction went smoothly. Italy saw borrowing costs halve to 3.251% as it sold nine billion euros of six-month bills, while demand topped 15 billion euros. This is encouraging, though that six-month yield is still 0.86 percentage point more than even the yield on the German 30-year bund.

Thursday's bond auction was more testing. Italy raised seven billion euros, less than the 8.5 billion euros maximum targeted. The yield on the 10-year bond was 6.98%, down from 7.56% at the last sale, but still far too high for a country that is likely in a renewed recession.

More broadly, investors who take too much solace in small relative improvements in the quality of Italian auctions could be akin to a frog in gradually heated water failing to perceive the danger of being boiled.

While 10-year yields below 7% are more palatable than above, they are still two percentage points above where they started the year. That is despite ECB rate cuts and a plunge in German yields of more than a percentage point.

Italy has no choice but to push on with its gargantuan funding program. It can sustain high yields for some time thanks to its long average debt maturity of seven years which means the higher rates take time to feed through. But 2012 still carries a serious risk that investors again feel the heat, and leap for the exit.

Write to Richard Barley at richard.barley@dowjones.com