Is Italian public debt a "free lunch" for investors?

Against a backdrop of very low interest rates, many investors are attracted by Italian public debt, which currently has a yield spread of 250 basis points over Germany. Are they right or are they taking an excessive risk? We believe there are reasons to buy Italian debt and that it is indeed a "free lunch": Italy will never leave the euro, given its massive gross external debt in euros; Italy will not restructure its public debt, as it is in the euro, because of the large domestic holding of this debt; Italy will not run up a very high fiscal deficit, because of the reaction by interest rates to such a deficit, which weakens the Italian economy and especially investment. This also rules out a very sharp rise in the yield spread with Germany.