MADRID (AP) — Spain raised far more money than it had initially planned in a debt auction Thursday, the second successful test of investor confidence since Standard & Poor's downgraded its credit rating last week.
The Treasury raised euro6.6 billion ($8.5 billion), much more than its initial aim of between euro3.5 billion and euro4.5 billion in debt maturing in 2016, 2019 and 2022.
Thanks to the ECB's massive injection of cheap money into the market in December and regular purchases of Spanish and Italian debt, Spanish auctions of shorter-term debt have gone well.
But Thursday's sale of benchmark 10-year bonds was seen as a tougher test of investor sentiment.
The interest rate on the 10-year bonds was 5.40 percent, down from 5.54 percent in the last such auction in December. The Treasury sold about euro3 billion of these bonds Thursday, with demand 2.2 times greater than the amount on offer.
It also sold euro1.3 billion in bonds maturing in 2016 and euro2.3 billion in bonds maturing in 2019. The bid to cover ratios in these cases were 3.2 and 2, respectively.
Spain's high borrowing costs — which hit nearly 7 percent on 10-year bonds late last year — have eased sharply since a Nov. 20 election saw the conservative Popular Party sweep to power on pledges it could reactivate the ailing economy and cut the deficit.
Spain, with a swollen deficit and eurozone-high 21.5 percent unemployment rate, is struggling to avoid being dragged further into the crisis threatening the 17-country eurozone that has already forced Greece, Ireland and Portugal to seek billions in bailout money.
The country has pledged to slash its deficit from 11.2 percent of GDP in 2009 to within the European Union limit of 3 percent by 2013.