Ireland sold €500 million of three-month treasury bills at a rate of 0.24 per cent yesterday at its first bond auction since the promissory note deal.

The sale was heavily subscribed with 3.3 times more bids made than the number of bonds on offer.

It is the second bond auction this year as €500 million worth of bonds were sold on January 17th with a yield of 0.2 per cent, better than the 0.55 and 0.7 per cent at two preceding sales.

Glas Securities executive Jim Ryan said: “While the rate is marginally above last month’s bill auction, which cleared at 0.2 per cent, in the context of a weaker tone in peripheral markets this morning, this is a good result.

“The range of bid/cover ratios since last July’s return to Irish treasury bill auctions has been 2.8 times to 4.1 times.”

The National Treasury Management Agency will hold three auctions in the first quarter of this year as it hopes to reach a €10 billion funding target in 2013 as the country prepares to exit its bailout programme.

It is predicted the promissory note deal will help Ireland by reducing the NTMA’s bond issuance requirement by €20 billion over the next 10 years.

Analysts at Glas Securities say there was a lot of “pent up” demand for Irish treasuries, though an upgrade from rating agencies may be the boost the bonds need to attract more investors to the market.

Bond market

Mr Ryan added: “The prospects for the bond market continue to improve, but there are many hurdles still to overcome.

“The spectacular fall in yields over the last 18 months suggests to us that positive technical factors underpinning the market are outweighing fundamentals.”