Foreigners are increasingly not interested in buying Italian and Spanish government bonds according the Fitch credit ratings agency.
It said the number of Italian bonds held by international institutional investors had fallen from 50 percent in 2008 to 32 percent last year.
For Spain, foreign ownership has fallen from 60 percent to 40 percent in that period.
Fitch sees that trend continuing over the next few quarters, until such time as Italy and Spain’s financial outlooks seem set to improve or investors become more open to risk-taking.
The rating agency said the foreign investor outflows have been offset by significant flows within the Eurosystem of central banks, reflecting increased use of central bank liquidity by Spanish and Italian banks.
In a statement it said: “The ECB money has fulfilled a triple role of supplying banks with funding, enabling them to increase purchases of sovereign debt to replace non-resident outflows and supporting the balance of payments of these economies.”