A source told Reuters the Treasury hoped to place between three billion and five billion euros of the bond via a syndicate of banks led by Caja Madrid, Citi, Credit Agricole CIB, Deutsche Bank, HSBC and Santander.
Early orders were said to total around 2.5 billion euros, according to Reuters service IFR.
Price guidance was 15-20 basis points over Spain's 4.65 percent July 2025 government bond, IFR said.
The issue comes a day ahead of a return to the market from Portugal, which plans to auction short-dated bonds on Wednesday after its sovereign yields hit a euro-era high on Monday.
Debt from the euro zone's most heavily indebted states remains firmly in the market's sights, though Spain has managed to differentiate itself from Portugal, seen as next in line for a possible international bailout.
Spain's 2025 4.65 pct bond was yielding around 5.84 percent on the secondary market at 1030 GMT, compared with a yield of 7.5 percent for Portuguese debt of the same maturity -- a level few analysts believe the country can sustain for long. But Spanish debt underperformed on news of the syndicated issue, widening the spread between yields on German bunds and Spanish bonos by 6 basis points to 216 bps.
Greece, too, is expected to return to the market on Tuesday, issuing Treasury bills a day after ratings agency Moody's slashed the country's credit rating by three notches, pushing it closer to a possible restructuring of its debt.
EU leaders meet later this week to try to find some common solution to ending the euro zone debt crisis, with peripheral debt likely to bear the brunt of any failure to agree a deal.
Prior to Tuesday's debt sale, Spain had raised 16.3 billion euros via the bond market in 2011, against a gross borrowing requirement for the year of 93.8 billion euros.
Financing costs have so far been manageable but analysts have concerns over debt redemption hurdles the country faces, the first of which is for 15.5 billion euros in April.
The Spanish Treasury insists its debt redemption dates coincide with months when the tax take is greater and so it will have little problem meeting its obligations.