Irish bonds rallied, sending yields to the lowest since 2006, on signs that the State will make a successful return to debt markets .

The National Treasury Management Agency (NTMA) this morning began testing the appetite of capital markets for Irish sovereign bonds, by offering a new 10 year bond on the international markets.

The agency, which is planning to raise at least €3 billion through the sale, said it had appointed Barclays, Citi, Danske Bank, Davy, Deutsche Bank and Morgan Stanley as joint lead managers for a 10-year "euro benchmark transaction".

The bond, maturing in March 2024, will mark Ireland’s first sale of debt since exiting the EU/IMF bailout programme on December 15th.

Dublin-based financial services firm Investec said the 10 year space was an obvious area for the NTMA to target, given the absence of any maturities in 2024 and the agency’s work towards rebuilding the curve and pushing out the weighted average maturity of the country’s debt.

“The deal is likely to be well over subscribed and will mark an important milestone for Ireland and, indeed, the euro area,’’ said Dermot O’Leary, chief economist at Goodbody Stockbrokers in Dublin.

“From a funding point of view, Ireland is already in a comfortable position, but the sale today is more about Ireland’s return to normality.”

Sources said bids for the issue had already reached €9 billion.

“Such extremely heavy demand reinforces the recent positive sentiment towards Ireland,” Ryan McGrath, a Dublin-based bond dealer with Cantor Fitzgerald, said.

“This bodes well for upcoming issuance by other euro zone peripheral countries.”

Irish debt rallied in the secondary market, with the yield on its benchmark 10-year bond falling 10 basis points to 3.27 per cent.

Ireland was priced out of markets in 2010 due to concerns over the economy and banking sector. This necessitated the €67.5 billion bailout.

Additional reporting: Bloomberg