Spain succeeded in raising 3.04 billion euros ($3.8 billion) in a short-term debt sale Tuesday but its borrowing costs soared as the eurozone debt storm battered Madrid.
The Treasury managed to beat its goal of raising 2.0-3.0 billion euros in a sale of 12- and 18-month notes.
It lured investors, with overall demand outstripping supply by more than two-to-one, but only at a sky-high price.
Compared to May 14, the yield shot to 5.074 percent from 2.985 for 12-month notes and to 5.107 percent from 3.302 percent for 18-month notes, Bank of Spain figures showed.
Spain is being battered by financial markets, where investors fret over the state of its stricken banks, which have been thrown a 100-billion-euro lifeline by the eurozone, and the state's indebted finances.
The yield on Spanish benchmark 10-year government bonds shattered the 7.0-percent barrier on Monday for the first time since the creation of the euro in 1999, pushing over 7.2 percent.
On Tuesday, the yield on 10-bonds dipped to 7.003 percent, a rate regarded as unsustainably high over the long term for a state to finance its operations as its debt would double over a decade.
The extra rate charged on Spanish 10-year bonds when compared to safe-bet German bonds, known as the risk premium, hovered at 5.63 percentage points, near euro-era records.