MADRID, Sept 20 (Reuters) - Spain raised 5 billion euros ($5 billion) via a syndicated sale of a new 20-year bond on Tuesday, with demand exceeding 39 billion euros, the Spanish Treasury said.

The bond was priced for a yield of 3.499%, offering a spread of seven basis points over the country's benchmark bond due in October 2040, according to a lead manager memo seen by Reuters.

The Treasury saw "very high demand" with a strong presence of international investors.

Prior to Tuesday's issuance, Spain had completed 78.7% of the 75 billion euros in net debt issuance it expects for this year, the Treasury said.

With interest rates rising and recession fears growing as surging gas prices exacerbate inflation fears, bond markets across Europe have been battered in recent weeks.

Spain mandated BBVA, Credit Agricole CIB, Deutsche Bank, J.P. Morgan, Santander and Societe Generale to handle the bond, which will mature on July 31, 2043.

($1 = 0.9967 euros) (Reporting by Yoruk Bahceli in London and Emma Pinedo in Madrid; Editing by Catherine Evans and Mark Potter)