The State has auctioned €500m in 12-month treasury bills at a record-low rate, offering investors an effective loss on their money of 0.55pc.

Today’s auction by the National Treasury Management Agency attracted four times the required bids from institutional investors, reflecting strong demand for “safe haven” debt securities despite the punitive payouts on offer.

The -0.55pc yield – the effective interest rate paid when bonds and bills are redeemed – was marginally lower than the -0.54pc yield achieved when the NTMA last auctioned treasury bills two months ago. That auction attracted less interest from the same field of registered institutional investors, which suggests growing demand for Irish debt securities.

While it might seem counterintuitive to acquire a T-bill that offers a guaranteed loss, Investec economist Ronan Dunphy said institutional investors must ensure a proportion of their money is confined to maximum security.

“Investors in these bonds need a secure place to store their cash and, in the current negative interest rate environment, all similar safe assets will only be offering negative yields,” Mr Dunphy told Independent.ie.

He noted that the latest yield on Irish debt still was “less penal” than the -0.68pc return offered by German government T-bills, and almost identical to the prevailing rate on Germany’s 10-year bonds.

Investment in a shorter-term Irish security could be more attractive than in a long-term German bond, he said, because “in that case, investors will effectively be locking in that negative annual return over a much longer period”.

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