The following article, originally published at 7:11 a.m. on Tuesday, Oct. 11, 2015, has been updated with comments from an analyst at Standard & Poor's.

Deutsche Bank (DB) - Get Report just got a big boost of confidence from global investors. Or did it?

The embattled German lender sold $3 billion of bonds late last week, in the first such deal since revelations that it faces a big fine from U.S. prosecutors over alleged misdeeds in the mortgage market. The bonds were sold to a private group of 14 institutional investors who felt that growing market pessimism over the bank's financial strength had created a buying opportunity, a person with knowledge of the matter said.

But the sale didn't come cheap. Deutsche Bank, Germany's largest lender, sold the five-year bonds at a yield of 4.3%, or a spread of three percentage points over U.S. Treasuries of comparable maturity. That's three times Deutsche Bank's average spread of 1.1 percentage points for debt issuance during the first half of the year. It's also three times the spread on five-year bonds issued by JPMorgan Chase (JPM) - Get Report, the largest U.S. lender.

The pricing on the new Deutsche Bank bonds shows that while some investors are still comfortable with the risks faced by the lender, they're demanding a premium that could drive up the Frankfurt-based lender's funding costs compared with global rivals. The deal also looks like another manifestation of low interest rates in the U.S., Europe and Japan that are driving investors to accept increasing risk in exchange for higher yields.

"Deutsche is probably looking to demonstrate that it has market access, and investors are looking for yield in a low-interest rate environment, so it suited both of them," said Richard Barnes, the Standard & Poor's analyst responsible for Deutsche Bank's credit rating.

Troy Gavitt, a Deutsche Bank spokesman in New York, declined to comment on last week's bond sale or identify the buyers.

The sale resulted from a "reverse inquiry," in which investors approach a company with an offer to buy its notes, the person with knowledge of the matter said. More often, companies decide of their own volition to sell bonds and then cast about for buyers.

Speculation has mounted in recent weeks over whether Deutsche Bank has sufficient capital -- the buffer of extra assets that banks must hold to protect depositors and prevent bailouts -- to withstand the U.S. Justice Department's proposed $14 billion fine over mortgage-related dealings.

The lender's stock has fallen 44% this year to $13.62, compared with a 5.8% gain on the S&P 500.

"I don't think investors got a juicy enough yield," said David Hendler, principal at Montebello, New York-based Viola Risk Advisors, which has analyzed Deutsche Bank's bond risks.

The bank needs to sell long-term bonds now, partly because it has about 21 billion euros ($23 billion) of debt securities coming due in 2017, Hendler said.

Under a new German law, senior unsecured bonds like those sold last week are considered eligible to be converted into stock if Deutsche Bank's situation grows dire.

And Barnes, the S&P analyst, confirmed that a default would occur if the notes were ever converted into stock. He declined to comment on whether the bank's elevated funding costs were sustainable, saying that the ratings firm would revisit the issue once the mortgage probe is settled.

In a statement last week, the ratings firm said that Deutsche Bank could face a credit-rating downgrade if it's "unable to demonstrate a clearer path to peer-equivalent profitability and stronger stand-alone creditworthiness."

S&P currently rates Deutsche Bank's senior unsecured bonds at BBB+, signifying the lender has "adequate capacity to meet its financial commitments" but remains vulnerable to "adverse economic conditions or changing circumstances."

The fact that the latest bond deal was sold privately to a handful of investors is a warning signal that the broader market might not have been so receptive, Viola's Hendler said. The bonds should have been priced to yield closer to six percentage points over Treasuries, he said.

"Private placements are not considered a benchmark," Hendler said. "They're trying to camouflage the fact their credit is weak. They're keeping all the information close to the vest."

Deutsche Bank has now sold at least 7.5 billion euros of senior unsecured bonds through private placements this year, against a 2016 target of 8 billion euros, based on company reports. As of June 30, the lender had sold 8.5 billion euros of senior public benchmark bonds, versus a target of 9 billion to 11 billion euros.

It's also worth noting that the bank sold the notes to mature in five years instead of 10, a term that's more common for large institutional bond deals, Hendler said. Longer-term bonds typically carry higher interest costs, because of the extra risk of holding them for a longer time.

Deutsche Bank's last big sale of five-year bonds in U.S. dollars was in May, when it placed $1.5 billion of notes at a yield of 3.4%, or 2.3 percentage points over U.S. Treasuries. Those notes, sold around par, have since traded down to 99 cents on the dollar, as the yields increased.

The person with knowledge of the matter said the new bonds were sold at a price discount, i.e. with a yield about 0.5 percentage point higher than the current market level. That's a typical concession when bonds are sold to a small group of investors, to compensate them for the risk that the notes might not be easy to trade out of.

And based on early trading in the notes, the buyers have made a tidy profit right off the bat; late Friday, the bonds rose in price. (The U.S. bond market was closed Monday due to the Columbus Day holiday.)

"Investors seem to have gotten a good deal," said Brad Golding, a managing director who trades bank securities at Christofferson Robb & Co. "Nobody's going to complain that they bought a bond on Friday and it traded at 102 cents on the dollar a couple hours later."