There was strong demand for Spanish bonds at an auction seen as a key test of the country's ability to raise funds.
It comes only days after Spain's government said it was impossible to access any funds, due to the prohibitively high borrowing costs.
The move, which includes raising 2.1 billion euros in bonds, is an important test of market confidence in Spain's ability to stave off difficulties in its banking sector.
The rate on the 10-year bonds was 6.044%, up from the 5.743% paid when bonds were last sold in April.
Spain sold 2.1 billion euros in medium and long-term bonds as European authorities work on a way to help Spain's troubled banking sector.
UK Chancellor George Osborne said: "I know they are working very hard on an imminent solution."
He told the BBC: "I am optimistic that people are working hard on a solution, and a solution, I think, is coming."
Borrowing costs had not been as high as feared due to these efforts in Brussels to try to find a way to help Spain, analysts suggested.
There was demand for 3.3 times as many Spanish 10-year bonds as were available on Thursday.
The Treasury sold 638m euros of 2-year bonds at a yield of 4.335% and 825m euros of four-year bonds at 5.353%, in addition to the 611m euros of benchmark 10-year bonds.
The yield on Spanish 10-year bonds from previous auctions, known as the secondary market, fell below 6.1% in trading on Thursday, having recently risen above 6.7%.
"Although the yield on the 10-year is just a tad below secondary market levels, these are prohibitive rates which underscore the dramatic deterioration in Spain's perceived creditworthiness," said Nicholas Spiro of Spiro Sovereign Strategy.
"If it wasn't for its banks' continued support at auctions, Spain would be unable to sell its debt."
Amid the rumours and speculation, the key question persists: How is the Spanish government going to raise the money to bail out Spain's troubled savings banks?
The news from this latest Spanish government debt auction is both good and bad.
Good because demand was high, evidence that the Spanish treasury can raise money on the markets if it needs to. But bad because the borrowing rates went up since the last auction and sit at levels which many financial experts believe are not sustainable in the longer term.
But 2 billion euros is a fraction of the amount reportedly needed by the Spanish Government to deal with the debt held by Spanish banks.
A conservative estimate for that figure would be 40 billion euros. But some think it could be much higher and that's why many believe some form of international assistance is needed to shore-up Spain's banks.
Spain is keen to avoid a full international bailout, which would be politically damaging and come with strict economic conditions.
It favours a bailout targeted directly at its banks, rather than at central government.
