Spain successfully raised 3.5 billion euros ($4.3 billion) Thursday in an oversubscribed bond sale, a reassuring sign for markets a day after ratings agency Moody's warned it may join others in downgrading the country's debt.

The average interest rate for the five-year bonds was 3.65 percent, up from 3.53 percent at the last such auction in May, and the sale was 1.7 times oversubscribed, the Treasury Department said. The government had hoped to sell between 2.5 billioin euros and 3.5 billion euros of the bonds.

A Treasury official said the oversubscription ratio showed the Moody's warning went "totally unnoticed."

Moody's Investors Service sent a shudder through financial markets when it said late Wednesday it has placed Spain's AAA sovereign rating under review for a possible downgrade because of worsening economic prospects.

The agency said it will re-evaluate Spain's credit rating over the next three months, adding it expects that any cut would only be by "one, or at most two, notches".

Spain's borrowing costs have risen significantly this year, deepening worries among investors already fretting over the country's ability to climb out of an economic slump while enacting deep spending cuts to reduce its budget deficit.

Fitch downgraded Spain's sovereign debt from AAA to AA-plus on May 28, saying austerity measures taken by the Socialist government will slow growth in the Spanish economy. It was Spain's second such downgrade in a month, after Standard & Poor's took a similar move.

Spain raised 3.52 billion euros in a 10-year bond auction May 20. The interest rate was 4.07 percent

Then, bids totaled 7.16 billion euros — more than double official expectations and a boost to market confidence in the country's ability to avoid default.