Spanish government bonds have been successfully sold at an auction on Thursday, achieving the value of EUR3.219 billion. While investors continue to see limited contagion from the Iberian country, the demand for the papers was stroked by challenges on bond markets. The local elections on the weekend are also raising concerns.

According to the treasury, €2.5 billion have been sold in 10-year bonds. The average interest rate was 5.4% (down from 5.9% in the last month). About €724 million in 30-year bonds have also been sold. However, in this case, the interest rate rose from 5.9% in March to 6%. As the demand was nearly two times the amount offered in both auctions, treasury’s aim was to rise it to €4 billion.

Since Portugal opted for a bailout, following Greece and Ireland, Spain’s borrowing rates have been increased in the last months. The country is seen by investors as the next weakest link in the Eurozone, despite the fact that there are few objective concerns at the moment that a Spanish bailout would also be needed.

According to market strategists, the market should be comforted that Spain have raised a decent amount, so that it can from now on focus on reducing its deficit. However, in order to meet its deficit goals, Spain will need the help of the autonomous regions. Although the country is managing to order its finances, any mistake would be quickly reflected on Spanish bonds.