Spain has raised €6.17 billion in short-term bonds at lower rates than at a previous similar auction, suggesting markets were more confident over the country's ability to cut a ballooning budgetary gap.
The treasury said it raised €4.97 billion in 12-month bonds at an average yield, or rate of return for investors, of 2.41%, down from the 2.947% paid at the last such auction on January 18. It raised €1.2 billion in 18-month bills, paying an interest rate of 2.94%, down sharply from 3.367% last month.
Demand totalled €16.7 billion at the auction in which Spain aimed to sell between €5.5 billion and €6.5 billion.
Concerns that Spain could be forced to seek a rescue by the European Union and International Monetary Fund as Ireland and Greece did last year pushed the country's bond rates sharply higher last year, adding to the costs of servicing its sovereign debt.
Those fears appeared to have eased since then as Spain has strengthened bank balance sheets, cut spending and pursued economic reforms.
Prime Minister Jose Luis Rodriguez Zapatero has said his government narrowly beat its 2010 public deficit target of 9.3% of gross domestic product. He has vowed to bring the public deficit to 6% this year and to within a EU limit of 3% in 2013.
Spain's public deficit hit 11.1% of GDP in 2009, the third-highest in the euro zone after Greece and Ireland.
