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Spain borrows at a lower — but still high — cost

Markets are waiting to see if it will seek aid

LONDON — Spain took advantage of improved bond-market sentiment to sell government debt Tuesday, but questions lingered over whether, or when, it will seek European help to lower its borrowing costs.

The Spanish Treasury sold $6 billion of short-term debt. While borrowing costs were slightly lower than in the previous sale, they remained high.

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Average yields fell to 2.835 percent on the 12-month bill from 3.070 percent in August, Reuters reported. Borrowing costs on 18-month debt were also slightly lower.

Earlier this month the president of the European Central Bank, Mario Draghi, announced an unlimited bond-buying program to relieve the pressure on countries like Spain and Italy, which had seen borrowing costs soar to levels likely to be unsustainable. Governments will need to request help, however, and accept conditions under the plans outlined by the ECB.

That could entail considerable loss of face for the government in Madrid, which has been reluctant to take such a step, despite signs that some other nations would like it to end the uncertainty.

Separate from the help to lower Spanish government borrowing costs is aid for the country’s banking sector.

The Bank of Spain said Tuesday that in July the country’s banks had loans at risk of not being paid that represent 9.86 percent of their total loans, the Associated Press reported.

In June, eurozone finance ministers agreed to make available emergency loans for the Spanish banking sector.

Prime Minister Mariano Rajoy wants the loans to be made directly to the banks, rather than be funneled through the government and increasing its sovereign debt.

But direct transfers cannot be made until the eurozone’s new banking supervisory system is in place. European Union states are divided on the details.

Nicholas Spiro, managing director of Spiro Sovereign Strategy in London, said that sentiment toward Spain was starting to deteriorate in the bond market because of the uncertainty about whether Madrid­ will request a bond-buying program.

“The Treasury managed to get all its debt out the door this morning, demand was solid, if unspectacular, and yields continued to fall,’’ Spiro said.

‘‘However, the window of opportunity for Spain to issue debt at what are still relatively favorable yields appears to be closing.

‘‘The longer Madrid dithers, the more likely it is that the markets will turn decisively against Spain,” he said.

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