UBS Wealth Management says that the recent Italian budget presents a buying opportunity for investors.

Fears of what the crisis could lead to have led to surging Italian bond yields and falling prices.

CIO Mark Haefele said on Wednesday that the firm is investing in short term Italian government debt.

UBS, however, warned to stay away from any Italian debt with a maturity of more than two years.

Amid the market panic surrounding Italy over the last week, the chief investment officer of UBS Wealth Management says now's the time to buy.

It's a contrarian call: "We are opening an overweight position in two-year Italian government bonds versus cash," Mark Haefele, who works at the $2.4 trillion wealth management arm of the Swiss banking giant, said on Wednesday. "The recent sell-off presents investors with an attractive opportunity."



Fears had been mounting in Italy over the brewing budget crisis, which could set the country and its leadership on a collision course with the European Union over excessive spending. Bond yields soared -- the country's benchmark 10-year bond is near its highest level since 2014.

Rising yields correspond with falling prices for bonds, and according to one of the world's most prominent wealth management firms, those falling prices represent a opportunistic way in.

Here's Haefele's reasoning:

"While we believe that Italy's credit rating is likely to be downgraded by one notch, the country is likely to retain an investment grade rating for at least the next 12 months, and we believe there is only a very low probability that Italy will default within the next two years. Just 13% of the government's bonds need to be rolled over by the end of 2019, so higher yields only gradually increase the cost of debt."

Still, Haefele urges caution. He warns against investing in longer-dated Italian debt, while saying investors should not concentrate their portfolios on Italian bonds.

"There are risks associated with the position," he said. "Italian yields could be pushed higher by escalating tensions between Italy and the European Commission, a breakdown of the current Italian coalition, or the departure of Finance Minister Giovanni Tria."