The Treasury sold 3.983 billion euros ($5.1 billion) in three- and six-month bills.
Investors showed moderate interest, with demand outstripping supply by more than two-to-one, and the government managed easily to meet its target of raising 3.0-4.0 billion euros.
But borrowing costs, which had slumped in previous weeks after the European Central Bank outlined plans to buy the bonds of stricken eurozone states, climbed sharply.
Compared to the previous similar sale on August 28, the three-month rate rose to 1.203 percent from 0.946 percent and the six-month rate to 2.213 percent from 2.026 percent, Bank of Spain figures showed.
Spain has cut a deal with the European Union for a rescue loan of up to 100 billion euros ($125 billion) for banks hobbled by bad loans extended before a 2008 property market crash.
But it has refused to be rushed into seeking a full-blown sovereign bailout until it knows the conditions.
The European Central Bank said September 6 it would buy government bonds to lower troubled states’ borrowing costs but only in return for strict conditions set by eurozone bailout funds.
That announcement alone sent borrowing costs for Spain tumbling, but in past days interest rates have crept higher again as investors begin to doubt whether Madrid will ask for the rescue.
“Investors remain concerned by the situation in Spain. Many are beginning to get impatient because the Spanish government has not taken the step and asked for a full-blown rescue, something that has been discounted for weeks as being inevitable,” said a report by brokerage Link Securities.
“Nevertheless, all the signs are that the Spanish executive is trying to avoid that possibility,” it said.
Spanish Deputy Prime Minister Soraya Saenz de Santamaria defended the government’s position of waiting to see the attached conditions before making a decision.
“It is like when you buy a house,” she told Cadena Ser radio.
“You don’t decide to buy a house in the same way as you buy a T-shirt. You think carefully about the mortgage, the conditions and this is the same procedure and mentality that the government is taking.”
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