THE EUROPEAN Financial Stability Fund (EFSF) is today holding its first auction of specially-issued bonds, being sold in order to raise cash to pay for Ireland’s bailout funds.

The bonds, which mature in July 2016, have experienced what the Wall Street Journal has described as “solid demand”, with the average yield for the bonds set to come in at around 2.85% or so.

By comparison, the yield this morning on Irish six-year bonds, the nearest comparable Irish-issued paper, had fallen slightly, but still sat at around 8.221% as of noon.

The average interest rate being paid by Ireland for the borrowings, which are to be lent on a 7.5-year basis, is about 5.83%.

“By all accounts investors are falling over themselves to get their hands on the EFSF bond,” ING strategist Padhraic Garvey said.

“The indications are that there is a strong international support for the new issuing vehicle. This of course makes sense as it is in everyone’s interest for the first EFSF bond to be a success.”

Today’s auction follows a similar bond issue by the European Financial Stability Mechanism, a sister bailout pot, earlier this month. Those bonds fetched an average yield of 2.5%.

Both the EFSF and EFSM are lending Ireland €22.5bn in funds, saving Ireland the need to go to the world’s markets where the interest rate would be much higher.