MILAN: Italy's borrowing rates fell in a bond auction that raised nearly 4.25 billion euros ($5.54 billion) on Thursday, as analysts said tensions ahead of elections expected in February would be "limited".
Italy raised 3.495 billion euros in bonds coming due in 2015 at 2.50 percent from 2.64 percent in the last sale in November and 729 million euros with bonds due in 2026 at 4.75 percent from 5.32 percent in September.
"Italy's political turmoil has limited credit implications for sovereign," Moody's ratings agency said in its daily Credit Outlook report.
"The bulk of the (Prime Minister Mario) Monti reform agenda, in particular labour market reforms and liberalizations in the service sector, has already passed through the parliament," it said.
"We expect that the next administration will adhere to most key elements" of Monti's reforms.
Monti announced on Saturday that he will step down in the coming days after Silvio Berlusconi's People of Freedom party last week withdrew its support for his government in parliament.
Financial markets dropped on Monday with the stock market falling by 2.2 percent and bond prices dropping sharply but the tensions have eased since then.
The benchmark FTSE Mib index in Milan was up 0.23 percent on Thursday. The rise in bond prices has levelled off, with the yield on 10-year sovereign bonds at around 4.65 percent on Thursday.
The prime minister has helped restore Italy's credibility on international markets and averted the risk of bankruptcy, stabilising public finances and launching long-delayed economic reforms.
His predecessor, three-time prime minister Silvio Berlusconi, has also announced he will run for election for a sixth time although some of his recent comments have cast doubt on his candidacy.
"Berlusconi's chances of returning as prime minister seem low because his party has recently lost significant ground in opinion polls," Moody's said.
"The possibility remains that Monti could return to the prime minister position, either as a candidate in association with the centrist movement or backed by Bersani if parliament instead opts for a second term technocratic administration," it added.
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