German banks, asset managers and pension funds took approximately 40% of the entire allocation of bonds recently sold into the market by troubled property lender Irish Nationwide.

The €750m bond issue was a success and gave the building society badly-needed funds as it tries to shrink its balance sheet and cope with escalating bad debts. After the German institutions, Irish funds and possibly Irish banks subscribed for 25% of the issue, which was managed by Goldman Sachs, Citigroup and DZ Bank.

The bonds come with a government guarantee and pay a coupon of 3.5%. The other big subscribers were Nordic countries, who took 12.7%, with Iberia the next biggest.

Bond traders were surprised at the level of German interest in the issue as many German banks have been overweight in Irish banking and government debt in the first five months of the year.