Ireland's cost of borrowing fell to its lowest level in over a month on Monday after a ratings upgrade from Moody's at the end of last week.

Ireland’s 10-year yields fell below 0.77 per cent for the first time since April 11th, down more than 3 basis points on the day.

On Friday, Moody's upgraded Ireland back to an "A" grade, moving the sovereign by one notch to A3 from Baa1. However rating agencies S&P and Fitch continue to rate Ireland higher, with S&P's A+ and Fitch's A rating two notches and one notch respectively above their Moody's equivalent following the upgrade.

Philip O’Sullivan, an economist with Investec in Dublin, said on Monday that the move “bolsters the already positive case for Irish sovereign yields”.

“We expect to see Irish yields move further towards core Eurozone levels from here,” he said.

Cantor Fitzgerald’s head of fixed-income strategy in Ireland, Ryan McGrath, said he was “happy to have been proved wrong” with Moody’s surprise upgrade. He was among eight out of 11 economists and analysts polled by the Irish Times who predicted before the announcement on Friday that Moody’s would hold off upgrading Ireland amid concerns over the UK’s referendum next month over EU membership.

“The upgrade was long overdue, as it was almost two years since Moody’s last Irish sovereign upgrade,” said Mr Ryan, nothing that while the ratings firm has narrowed the gap with rivals, it still lags Standard & Poor’s, which rates Ireland A+, and Fitch, which has an A stance on the country.

While German 10-year bond yields flirted once more with record lows of just 0.05 per cent, on Monday they were yielding about 0.12 per cent and French 10-year bonds are yielding about 0.47 per cent. Yields on Spanish, Italian and Portuguese 10-year bonds remain above 1 per cent.

(Additional reporting Reuters) Irel