The Spanish treasury launched a surprise issue of 10-year bonds today, a banking source said, with the government reportedly hoping to raise between €2 and €3 billion.

The syndicated bond issue has received strong demand of over €4.5 billion, according to Spanish media reports.

The banks handling the bond sale are Barclays, BBVA, Deutsche Bank, Goldman Sachs, Santander and SocGen.

The surprise bond issue came on the heels of a rally in government bonds from highly indebted nations on the euro zone periphery. Spain has already completed a quarter of its gross bond issue plan for this year, which totals €86 billion.