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Interest rates drop as Spain raises $7.5 bln in successful debt sale

MADRID – Spain has sold €5.8 billion ($7.5 billion) in short-term debt at a lower cost, in a further indication that investors are less fearful over the state of the country’s public finances.

The Treasury said Tuesday it sold €3.85 billion in 12-month bills at an average interest rate of 1.36 per cent, compared with 1.55 per cent in the last such auction Feb. 12.

It also sold a little under €2 billion worth of six-month bills at 0.79 per cent, compared with 0.86 per cent last month.

Demand was more than double the amount offered.

Spain’s borrowing rates have dropped in recent months, due in part to the government’s deficit-reduction program and waning fears of the need for a bailout.

However, Spain remains in recession and has an unemployment rate of 26 per cent.