Cost of short-term State borrowing falls

The cost to the State of borrowing short-term debt has fallen in the past month as demand among investors for Irish bonds surged.

The results of today's auction of €600m worth of treasury bills, due to be repaid after six to eight months, show interest rates have fallen from almost 2.5% for six-month debt to less than 2%.

The bids received were six times greater than the total value of the Treasury Bills up for auction - indicating a strong demand among international investors.

This is despite Ireland's credit rating being cut by Standard and Poors earlier this week.

The State is, however, paying a premium of more than 2% in excess of Germany to borrow money on the same terms.