There was a surge in demand Tuesday for Irish 10-year bonds, the first issued on debt markets since the country exited its international bailout program last month.

The Irish treasury said it sold 3.75 billion euros ($5.5 billion Cdn) in bonds, with an average yield of 3.54 per cent, considered low among EU’s crisis-hit countries such as Spain, Portugal and Greece.

Investors from around the world placed 14 billion euros of orders for the 10-year bonds, giving Ireland leeway to pick from what one analyst called “a who’s who of northern European real money investors.”

"The Dublin government's bond auction was a roaring success, more than three times oversubscribed, and the golden boy of austerity is making the rest of the PIGS — Portugal, Italy, Greece and Spain — green with envy," said Brenda Kelly, an analyst at London financial derivatives trader IG Group.

She predicted that Moody's, the only credit rating agency yet to upgrade its position on Ireland, was likely to raise the nation's debt securities back to investment grade in its next report on Jan. 17.

Portugal could be next

The success of the auction makes it more likely that Portugal will exit its bailout program later this year and follow Ireland’s example of tapping bond markets.

 European partners and the International Monetary Fund gave Ireland a three-year emergency loan package worth 67.5 billion euros ($98 billion) in 2010 when the country faced national bankruptcy because of its bank-rescue program.

Ireland opted not to seek any safety-net credit line from the EU or IMF when that rescue package expired on Dec. 15 and instead built up a cash pile of 20 billion euros, enough to pay the state's bills through 2014.

 Michael Corrigan, chief executive of Ireland's treasury, said the bond sale generated cash that Ireland will need in 2015. Ireland plans more auctions this year to raise a maximum of 10 billion euros.

Low inflation in EU

The falls in yields came at a time when eurozone inflation is at a sustained low – about 0.8 per cent in December.

There is pressure on the European Central Bank to act because of fears of deflation, which could stall Europe’s fragile economies.

With files from the Associated Press