Without necessary reforms, eventually this vicious circle of stagdeflation would force Italy to exit EMU, returnto the Lira and default on its Euro debts.
In consequence pension funds and banks will no longer be able to give up some of their bond yield in return for insuring the capital against government default.
To do a quick and dirty analysis of the expected return for junk bonds, all you need to do is look at the yield and subtract the default rate ( read why here).