The National Treasury Management Agency has successfully raised €500m in an auction of three month treasury Bills at a yield, or interest rate, of 1.8%.

It is the first time the NTMA has gone to the markets with a new issue of Government debt of any kind since September 2010.

Analysts said that the 1.8% was better than the expected 2% rate for the three month treasury bills.

The debt was auctioned to a group of international banks between 9am and 10.30am this morning.

The auction also see if Ireland can re-enter the sovereign debt market in the medium term.

The Government says last week's EU summit decision on bank debt paved the way for today's auction.

It aims to build on positive market sentiment towards the country, as reflected in the falling yields on Irish Government debt.

Though still too high for a full return to the markets, Irish long term bond yields and the cost of insuring them against default have fallen below comparable Spanish rates.

The NTMA said that during today's T-Bills auction, one primary dealer sold the bills to eight clients. Five were from continental Europe, two were from the UK and one was from Ireland.

NTMA encouraged by strong demand

The chief executive of the NTMA, John Corrigan, said that the agency was encouraged by the strong demand, the competitive interest rate and significant national interest in the auction.

"We are conscious that this is only the first step towards our ultimate goal of full access to the capital markets," he added.

Speaking on RTÉ Radio, Mr Corrigan said the interest rate of 1.8% was significantly below what Spain recently sold similar debt for. He said the NTMA's primary dealers indicated that there had been good interest from money managers in continental Europe in today's auction.

The NTMA CEO said while today's sale was a significant step, there was a lot more work to do before Ireland could get back into the bond markets, adding that the long-term bond market was quite separate from the short term one.

Mr Corrigan said the NTMA plans to have three or four more short term options before the end of this year, and plans to access the long-term bond markets in 2013. He said that would involve bonds with a two-year-plus maturity.

He said returning to the markets depended on two factors - sticking to the Troika programme, and the wider ''mood music'' in Europe, which has improved since last week's summit.

Owen Callan, Senior Dealer with Danske Markets said, "This is a very good result, particularly when compared with similar Italian and Spanish Treasury bill levels and after a two year hiatus from the markets''.

Total bids in the NTMA auction amounted to €1.4 billion at a bid to cover ratio of 2.8.

''It was encouraging to note that the bulk of the interests involved were in the international space with some domestic involvement,'' Callan said in research note today.

''Also, it was clear that many international players were keen to see how this auction went, with a view to getting involved in the secondary market or at future actions,'' he added.

The dealer also said some of the feedback was that an issuance with a longer tenor would have been preferable. ''That spells for good future demand to allow the NTMA to scale up the Treasury bill programme over the second half of the year,'' he said.

Speaking in Frankfurt today after the ECB cut euro zone interest rates from 1% to 0.75%, its president Mario Draghi said that Ireland's success in markets today after the country's T-bill auction should be "properly celebrated."