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By Sonya Dowsett
MADRID, April 3 (Reuters) - Spain's borrowing costs over five and 15 years fell to record lows on Thursday, demonstrating continued strong demand for Spanish debt backed by growing optimism about the strength of an economic recovery.
Spain easily exceeded its target range in a triple-bond auction ahead of a European Central Bank interest rates decision expected to keep borrowing costs unchanged despite deflation risks in the region.
Consumer prices in Spain, the euro zone's fourth largest economy, fell at their fastest annual pace in almost four-and-a-half years in March data showed last week, fuelling concerns of deflation in the euro zone.
The Treasury sold 5.6 billion euros ($7.71 billion)of five-, 10- and 15-year bonds on Thursday, outstripping a target range of between 4.5 billion to 5.5 billion euros.
The yield on the 5-year bond hit a record low based on the historic data on stop-out rates at auctions.
The stop-out rate on the 10-year bond was the lowest in the past nine years of auctions. The yield on the 2026 bond, originally issued as a 15-year-bond, also hit record lows at auction, although the comparison is not exact since it has a residual life of 12.5 years.
The shortest-dated paper, due April 30, 2019, sold at an average yield of 1.869 percent compared to 1.991 percent when it was last auctioned on March 20.
The Treasury sold 2.7 billion euros of the debt with demand of 1.7 times compared with 1.8 last month.
The benchmark 10-year bond sold 1.6 billion euros at an average yield of 3.291 percent compared to 3.344 percent when it was last auctioned on March 6. The bond was 2.1 times subscribed after 2.8 times previously.
The July 30, 2026 bond, last sold in January, auctioned for an average yield of 3.553 percent compared to 3.977 percent previously and sold at a bid-to-cover ratio of 2.2, compared to 1.4 in January. The Treasury auctioned 1.2 billion euros of the bond.
The Treasury has said it aims to take advantage of renewed interest in its paper and extend the average maturity of public debt by focusing on longer-dated debt. ($1 = 0.7263 Euros) ($1 = 0.7263 Euros) (Reporting By Sonya Dowsett)