Spain's borrowing costs drop in bill auction

Spain's borrowing costs eased Tuesday as the Treasury raised 4.0 billion euros ($5.3 billion) in an auction of three- and nine-month bills, reflecting easing investor concerns over the ability of the recession-hit to repay debt.

The Treasury sold 885.69 million euros' worth of three-month bills with an average yield of 0.421 percent, down from 0.441 percent from the last similar auction held on January 22.

It raised another 3.115 billion euros through the sale of a new nine-month bill at an average yield of 1.144 percent.

The Spanish government had set a target of raising between 3.0 billion and 4.0 billion euros in the auction.

Demand outstripped supply in the three-month auction by 5.76 times in the three-month auction and by 2.31 times in the nine-month auction.

Spain's borrowing costs have fallen since the European Central Bank announced in September its readiness to buy an unlimited sum of bonds to curb borrowing costs for troubled member states that accept strict conditions.

Falling borrowing costs have eased pressure on the government of the eurozone's fourth-biggest economy to seek European help to finance its debts.

The Treasury estimates its gross financing needs at 215-230 billion euros in 2013, after borrowing a total 249.6 billion euros in 2012.