Spain's Treasury sold nearly 10 billion euros ($12.8 billion) in debt Thursday at lower yields than previous auctions, raising nearly double the target amount for the sale.
The auction of three different bonds - with maturities of three and four years - attracted heavy demand, with 18.7 billion euros ($23.9 billion) in orders received.
The auction was the first this year by the Spanish Treasury and the first since new Prime Minister Mariano Rajoy's government unveiled an austerity package and announced that the country's 2011 public-sector deficit would come in higher than previously anticipated.
Spain sold about 4.3 billion euros worth of a new three-year bond at a yield of about 3.38 percent.
The Treasury also sold about 5.7 billion euros worth of two other existing bonds maturing in 2016 at yields of between 3.75 percent and 3.91 percent, down from yields of between 4.85 percent and 4.87 percent at auctions last year.
Including Thursday's auction, Spain now has a streak of three consecutive bond sales in which it raised more than the target amount and sold the debt at lower-than-expected yields amid strong demand.
Following the successful bond sale, Spain's debt risk premium - the extra return on Spanish 10-year government bonds compared to equivalent safe-haven German debt - fell Thursday to 330 basis points.
In Thursday's session, Spain's risk premium dropped by 21 basis points at the close after falling to as low as 325 at one point during the day, while the yield on the country's 10-year bond finished the day at 5.13 percent, down from 5.33 percent on Wednesday.