Spain enjoys lower rates in new bond issue

Spain enjoyed lower interest rates Thursday in a multi-billion-euro bond auction, a sign market fears of a debt crisis are easing.

Concerns that eurozone debt troubles could spread to Spain had pushed bond rates sharply higher last year, adding to the costs of servicing the country’s sovereign debt.

Fears that Spain may be forced to seek a rescue by the European Union and IMF appeared to have eased since then as Madrid strengthened bank balance sheets, cut spending and pursued economic reforms.

The Treasury said it sold 1.893 billion euros in three-year bonds at an average yield of 3.254 percent, down from 3.717 percent in the last comparable auction December 2, 2010.

It also sold 1.614 billion euros in five-year bonds at an average yield of 4.045 percent. That was up from 3.810 percent at the last comparable auction but that dated back to February 19, 2009.

Portugal, widely feared to be the next domino to fall in the debt crisis after Greece and Ireland, also seems to have partially soothed financial market concerns.

On Wednesday it too enjoyed lower interest rates and strong demand for a 1.255-billion-euro auction of short-term debt.