The European Central Bank's unprecedented cash injection iseasing borrowing costs for Italy, Spain and Belgium, compensatingfor the lack of a solution to the debt crisis and the risk ofrecession.

Two-year Italian yields have dropped by 50 basis points andBelgian notes of the same maturity have declined by 22 basis pointssince Dec. 21, when the ECB supplied banks with 489 billion euros($636 billion) of three-year loans. Short-dated Italian and Spanishdebt outperformed AAA rated German and Dutch securities during thatperiod.

“Short-term borrowing costs have come down significantly andthat certainly helps to buy time,” said Jens Nordvig, managingdirector of currency research at Nomura Holdings Inc. in New York.“Six weeks ago, it looked as if there was going to be an imminentfunding crisis, but that's averted by the ECB's moneyinjection.”