Spain auctioned bonds at lower costs on Thursday with the country's 10-year borrowing costs falling to the lowest level in three years in a further sign of growing investor confidence in the country.
The Spanish Treasury raised 3.51 billion euros ($4.75 billion) in bonds of five and ten years' maturity, with demand outstripping supply by a ratio of 2.2 to one.
It raised 1.18 billion euros of 10-year bonds with the rate of return falling to 4.269 percent from 4.503 percent in the last comparable auction on September 5 and its lowest level for this maturity at a debt sale since September 2010.
The Treasury also raised 1.38 billion euros in five year bond at an average yield of 3.128 percent, down from 3.477 percent at the last similar auction of September 5, and 955 million euros in anote maturing in January 2018 at a yield of 2.795 percent, down from 3.001 percent.
The Spanish government had expected to raise 2.5-3.0 billion euros in the bond auction.
With Thursday's auction Spain has now completed 86.2 percent of its insurance target for 2013, the economy ministry said in a statement.
Borrowing costs for Spain and other nations on the euro zone’s periphery have eased since the European Central Bank pledged last year to buy debt of troubled euro zone members if needed.
Spain, the euro zone's fourth-largest economy, is still struggling to overcome the aftermath of a decade-long property bubble that imploded in 2008, destroying millions of jobs and sending debt levels soaring.
The government has said it expects the economy to emerge from a two-year recession in the third quarter and will post growth of 0.7 percent next year.