The penalty that banks in Europe’s most indebted nations pay to borrow compared with those from the richest economies fell to the lowest in four years amid growing confidence in the region’s economic recovery.

Lenders from Italy to Greece now pay 0.38 percentage points more yield than borrowers from core nations including France and Germany, down from a high of 4.38 percent reached in November 2011, according to Bank of America Merrill Lynch index data.

The average yield on bonds issued by peripheral banks fell 56 basis points this quarter to a record 2.17 percent, the data show.