The amount of interest that Spain had to pay fell at its latest short-term debt auction on Tuesday.
That implies investors believe the European Central Bank will intervene on bond markets to help Madrid borrow at more affordable rates.
But the lack of detail over when and how the Bank could act meant the interest rates – or yields – remained punishingly high.
Daniel Alvarez, an analyst with XTB Brokers in Madrid said: “It’s true that the ECB, with its usual slowness and even clumsiness, continues its denials, saying there is still no agreement on the table. It could be that this is a strategy to satisfy the interests of the Bundesbank, the German interests, but it seems that when there is smoke, there is fire and it’s likely – at least we believe, we are optimistic – that the ECB will, over the next few days, take some sort of action.”
The money that Spain’s Treasury borrowed on Tuesday is due to be paid back in 12 and 18 months.
Madrid will not sell longer-term debt until the sixth of September, the same day Prime Minister Mariano Rajoy hosts German Chancellor Angela Merkel in Madrid.
That is also the date the ECB is expected to detail its plans for addressing the eurozone’s debt crisis.