Spain kicked off a series of bond sales today that could prove critical in its efforts to avoid the fate of bailed-out EU neighbours Greece and Portugal as it seeks to trim its budget deficit and stabilise it struggling banks.

The government's plans to raise around €5.5 billion got off to a bumpy start, however, as short-term borrowing costs in Tuesday's Treasury bill auction nearly doubled from similar efforts last month.

Spain sold around €3 billion in 12 and 18-month Treasury bills – bought mostly by the nation's banks – Tuesday at yields of 1.4 percent and 3.11 percent respectively.

Both costs were around 85 percent higher than auctions in March and reflect increasing investor concern over Prime Minister Mariano Rajoy's ability to meet EU-mandated deficit targets.

Benchmark 10-year bond yields fell briefly on Tuesday - but with yields hovering at around 6 percent – and moving closer to the 7 percent threshold that triggered bailouts in Greece and Ireland - Spain will need a successful auction Thursday to maintain access to the bond markets as it seeks to borrow another €18 billion between now and the end of the year.