Spanish borrowing costs plunge in debt auction

MADRID — Spain’s borrowing costs have plummeted in a short-term debt auction, indicating market confidence in the country’s ability to handle its debt is recovering.

The Treasury said Tuesday it sold (euro) 5.6 billion ($7.3 billion), way above the (euro) 4.5 billion it had initially sought.

It sold (euro) 3.7 billion in 3-month bills at an average interest rate of 1.74 percent, down sharply from 5.1 percent in the last such auction on Nov. 22.

It sold (euro) 1.9 billion in 6-month bills with a yield of 2.44 percent, against 5.22 percent last month.

Short-term credit conditions have eased significantly in recent weeks, helped in part by the European Central Bank’s offer of ultra-cheap loans to the financial sector.

Spain’s Parliament was to vote conservative Popular Party leader Mariano Rajoy as premier later Tuesday.