Spain's borrowing costs fell to six-week lows and short-dated bond yields in Greece tumbled after ratings upgrades for the two southern euro zones states.
On a day when most euro zone government bond yields headed higher, alongside US peers as a US government shutdown entered a third day, Spanish and Greek bonds outperformed.
S&P Global Ratings, releasing its review on Greece after Friday's market close, lifted Greek long-term, foreign currency ratings for the first time in two years on improvements in the finances and fiscal outlook for the debt-laden nation.
Spain's 10-year bond yield fell 4 basis points to 1.39%, its lowest level in six weeks.
The premium investors demand for holding Spanish bonds over top-rated German government debt fell to around 89 basis points, its lowest since March 2015.
Short-dated Greek bond yields were down almost 8 bps at 1.31%. Five-year Greek bond yields were slightly lower at 2.81%; longer-dated bond yields were a touch higher.
Greek yields have fallen sharply in recent weeks on expectations that Greece will exit its bailout programme this year and analysts said this was likely to remain the key driver of Greek debt.
Sentiment towards peripheral bonds was also supported by hopes for a deal to create a coalition government in Germany, the euro zone's biggest economy.
