Ireland is likely to be a top beneficiary of the European Central Bank’s forthcoming €1.1trillion quantitative easing (QE) programme bond strategists say.

The country’s improving economic prospects, together with the fact that it has a smaller, less liquid market than lower-yielding nations such as the Netherlands and Belgium, make it likely to benefit from QE, pushing borrowing costs even lower.

“I would not be surprised if Irish treasuries start to trade on par with France on sub-5Y maturities,” Cyril Regnat, a fixed-income strategist at French bank Natexis, said, referring to five-year debt.

BNP Paribas, Commerzbank and Nordea Bank also foresee gains being made in Ireland's debt. The country's five- year yields dropped to a record-low 0.271 percent on Monday. Its rate was about 24 basis points higher than equivalent-maturity French debt on Wednesday. The spread narrowed to six basis points in September, the least since 2008.

Portugal however is cited by analysts as likely being the biggest beneficiary of QE.

Portugal’s bonds are the highest-yielding to be included in the plan, and the nation’s debt market should be among the most saturated by ECB bids, the strategists say. The relatively low liquidity of the securities also offers the potential for a bigger rally as prices rise, they say.

"Portugal could see the biggest technical squeeze as a result of ECB QE," said Peter Goves, a London-based strategist at Citigroup, which recommends buying 30-year Portuguese bonds. "The hunt for yield clearly remains intense."

That’s a boon for the Portuguese government because its borrowing costs should fall in international markets. The nation’s 10-year yield already tumbled to the lowest on record this week. It took advantage of the upswing in demand to sell 30-year securities in January, the longest bond maturity since the country exited an international aid program. The country’s debt agency has issued almost 60 per cent of its 2015 target.

Bloomberg