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BHP Billiton makes rare return with AU$1 billion, five-year bond offer

SYDNEY -- Global mining giant BHP Billiton made a return to the Australian bond market after an 11-year absence with a AU$1 billion (US$1.02 billion) five-year issue paying 90 basis points over bank bill swap rate.

The issue was heavily oversubscribed with talk of a total order book around AU$2 billion, according to one participating investor. He said every account was scaled back and the notes paid a tighter margin than the 95 basis point spread initially marketed.

There was so much demand that the issue paid less than Australian banks, which stand among the world's top financial institutions. They are rated AA-, which is higher than BHP's A+/Stable/A-1 by Standard & Poor's and A1/Stable/P-1 Moody's.

Investors thought the bond issue offered fair value compared with BHP's offshore issues. One fund manager estimated a pick up of around 20 basis points over a euro bond, while another investor who compared it with BHP's U.S. dollar bond offers saw only a marginal premium.

All three buyers, who asked not to be named because they were not allowed to speak to the media, said they welcomed the rare offer from a borrower that usually sources its funding in Europe and the United States.

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