The National Treasury Management Agency (NTMA) raised €1 billion in funding through an auction of three and seven-year bonds.
The 3.9 per cent bond, which matures in 2012, and the 4.6 per cent bond which reaches maturity in 2016, were both oversubscribed at 5.2 and 3.4 times respectively.
Some €400 million of the 2012 bond, which was sold at an average yield of 2.178 per cent, was issued, while €600 million of the 2016 bond was sold at an average yield of 3.867 per cent.
Last week, a new 15-year, €7 billion benchmark treasury bond was successfully issued.
Stockbrokers described the auction as very successful, noting the strong demand.
Economist with Bloxham Stockbrokers Alan McQuaid said the effect of the Yes vote in the Lisbon Treaty referendum and the Green Party convention's approval of the National Asset Management Agency (Nama) was reflected in healthy demand for the bonds.
"Greater risk appetite generally among market investors also helped in having a successful sale, in what is a relatively light week as regards Eurozone bond auctions," he wrote in a note. "However, there is no doubt that international investors are feeling increasingly comfortable about buying Irish paper, though that could change if the Government fails to deliver the much-needed 'hair-shirt' Budget in December.
"It's quite clear from the most recent Exchequer Returns that there is very little scope to raise taxes much more at this juncture, so the main emphasis of the 2010 Budget has got to be very much on the spending side. If the Government fails to deliver on reducing expenditure, the bond markets are likely to make it pay a heavy price."
The NTMA has raised a total of €32.5 billion in the bond markets this year, and expects to raise a further €1 billion in the final scheduled monthly auction of 2009, which takes place in November. In the small or retail debt market, funding of €1.3 billion has also been raised.
However, Mr McQuaid warned against complacency.
"Although the NTMA has been successful in raising the shortfall between government spending and tax revenue this year, we as a nation shouldn't become complacent and believe that the answer to all our problems is to keep on borrowing," he said.
"Quite simply, the huge levels of debt we are building up are unsustainable in the long-run. Ireland is now in a position where it needs to borrow more to fund a larger budgetary deficit, while paying higher costs for this borrowing. This means that ever increasing proportions of the country's tax revenues will be needed to service the national debt."
