ITALY could turn out to be the investment bet of the decade if European Union leaders manage to contain the eurozone crisis.
But buying Italian debt at this time is only for the brave -- and those who believe the worst of the danger for the eurozone's third-biggest economy has passed, according to interviews with more than a dozen investors and bankers.
In Davos yesterday, George Soros called returns above 6pc on 10-year Italian debt a "dangerous" but "attractive" speculation.
"That's a fantastic yield, which is not going to stay up there the moment things settle down," said Soros, once the world's best-known hedge-fund manager.
"At 6pc or 7pc, Italian bonds are a speculation. At 5pc or 4pc I think they would be a very, very good long-term investment."
Ten-year Italian bonds have been one of world's best-performing assets since the start of 2012, beating a 6.4pc annual return offered by traditional safe-havens such as gold.
The prospect that new prime minister Mario Monti will put Italy's house in order after decades of lax fiscal policy is lifting some of the gloom.
But with uncertainty still hanging over the future of the eurozone, the difference in returns offered by 10-year Italian bonds compared with equivalent German bonds, currently just above 4pc, would have to fall by at least one percentage point to attract substantial inflows.
In order to engage in this type of bet, one has to be convinced that the eurozone will survive a looming Greek debt restructuring and projections of prolonged slow growth.
Several non-European investors interviewed by Reuters were uninterested in buying the bonds of Italy, Spain and other weak European states because they were not convinced politicians will achieve a lasting solution to Europe's woes.
But there is a play to be made if one has faith in Europe's leaders.
"We are sitting on a bomb now. If the bomb explodes we are all dead. But if it doesn't, Italy is a better place to be than Germany," said a hedge-fund manager, speaking on condition of anonymity because of the sensitivity to his business.