Spanish banks are being frozen out of the European interbank market, and only the biggest Spanish entities are managing to finance themselves, according to a report in newspaper Cinco Dias.

"Only the biggest Spanish banks are managing to get funding, but backed by bonds from other countries such as Germany, with our national bonds they are not managing to get anything," an executive at a Spanish savings bank was quoted as saying.

The situation had worsened since the start of this week, the report said.

"No foreign banks are funding us in the interbank market," an executive at one of Spain's medium-sized banks was quoted as saying.

At the end of May Spain's credit rating was cut by Fitch to AA plus from AAA, adding to fears that Spain is heading for a debt crisis from which it will need to be bailed out, like euro zone partner Greece, and threatening the future of the euro.

On Monday, the Treasury announced it would aim to raise between 3 billion euros and 4 billion euros ($3.60 billion and $4.80 billion) on Thursday thought the auction of a new benchmark, three year bond.

Amid concerns that the auction might not be well enough bid, analysts have said they do not expect the auction to fail partly because Spanish banks such as Santander and BBVA would buy the bond if necessary.