Spain's Treasury sold 4.8 billion euros ($6.2 billion) worth of debt Thursday in an auction that attracted strong demand, paying a sharply lower interest rate on its benchmark 10-year note.
The average interest rate on that bond was 5.7 percent, down from 6.706 percent in the previous auction and roughly equivalent to the yield on the 10-year note in the secondary market.
The interest rate on the benchmark bond, 859 million euros ($1.1 billion) of which were sold in Thursday's auction, was the lowest since February.
However, the average interest rate on Thursday's issue of three-year notes, 3.9 billion euros ($5.1 billion) of which were sold, stood at 3.919 percent, up from 3.774 percent in the previous auction and higher than the 3.669 percent yield in the secondary market.
The yield on the country's 10-year note has fallen since the European Central Bank announced early this month that it will buy unlimited amounts of government bonds to help Spain and other countries hobbled by high borrowing costs.
Thursday's auction was oversubscribed 1.7 times.
In another debt auction Tuesday, the only other one since the ECB's announcement, Spain also attracted higher-than-expected demand and sold the bonds at substantially lower interest rates.
Spain's risk premium - the extra return investors demand on the country's 10-year bond compared to equivalent, safe-haven German debt - was virtually unchanged following the debt auction at 413 basis points, down from 415 basis points at the market opening.
It had soared above 600 basis points in July, though the spreads have narrowed significantly since then.
The Spanish economy has been battered by the global recession and the collapse of a massive real-estate bubble, which has left many financial institutions saddled with toxic property assets.
This summer, euro-zone finance ministers approved a loan of up to 100 billion euros ($129.7 billion) to recapitalize Spain's banking sector.
Overall unemployment stands at nearly 25 percent, while Spain's young people are facing a jobless rate of more than 50 percent.
In recession for the second time in three years, the country has suffered a sharp drop in tax revenues stemming from numerous businesses failures and the high joblessness.
In a bid to improve the country's financial picture, Spain's government has pushed through a series of austerity measures aimed at meeting a European Union-mandated budget deficit target. EFE