Ireland has raised €4bn via a new three-year bond issue, but had to pay a relatively high coupon to attract investors, illustrating the difficulties facing cash-strapped European governments while sentiment is poor and a flood of supply is expected.

The country saw about €5bn of demand for the deal, but had to offer 25 basis points, or one-quarter of 1 per cent, over average European government bond yields, which was at the high end of expectations.