The scarcity value of a bond of this calibre, from a Singapore standpoint, a utility standpoint and a ratings standpoint, meant the underwriters were able to drive the price on the different tranches below the indicative pricing, a source familiar with the deal said.

The bonds are rated Aa1 by Moody's Investors Service and AA-plus by Standard & Poor's, and are also deriving value from the fact that SP PowerAssets has a monopoly as the owner of Singapore's only power grid. Its parent is also owned by the Singapore government.

'The market valued [the bond] by pricing it effectively as a triple-A credit,' the source said.

He said one reason for this was that the pricing on the US dollar tranches was driven by US investors who knew that it was a unique asset both in its quality and liquidity, and therefore were not prepared to wait for the next one.

The US$600 million five-year tranche was priced at 99.995 per cent with a coupon of 3.8 per cent. This is equal to 55 basis points above US treasuries and 15 basis points above US-Libor (London interbank offered rate), according to joint underwriters Morgan Stanley and DBS Bank.

The US$1 billion 10-year tranche was priced at 99.363 with a coupon of 5 per cent, or a spread of 73 basis points above the equivalent US treasury and 30 basis points above US-Libor.

Initial price guidance for the five-year note was 20 to 25 basis points above US-Libor, while for the 10-year it was 35 to 40 basis points.

The company also issued S$550 million in seven-year bonds and S$500 million in 15-year bonds that saw demand mainly from Singapore and Hong Kong investors, DBS said.

The seven-year tranche was priced with a 3.73 per cent coupon at 25 basis points above the US-Libor equivalent swap offer rate, while the 15-year tranche was priced with a 4.84 per cent coupon at 38 basis points more than the swap offer rate.

Real-end investors had bought all the bonds, leaving the underwriters with clean books, according to Stephen Finch, a managing director of debt capital markets at DBS.

He declined to comment on the level of interest, saying only that the global subscription rate was 'well over the offered amount', but market sources said the US dollar tranches had attracted more than US$6 billion worth of demand.

The addition of debt to Singapore Power's balance sheet, through the bond-issuing subsidiary, will reduce its weighted average cost of capital, especially in the current environment with 40-year low interest rates.

In combination with the asset restructuring, this would enable it to assume a leaner structure and allow it to generate higher returns, while at the same time being able to cut tariffs for its customers, the source said.

This would seemingly open the door for a partial privatisation, but yesterday DBS said the company had mentioned no such plans during the bond roadshow.

Money raised will go towards the payment of S$7.8 billion of power grid assets transferred from its parent company as part of restructuring. SP PowerAssets will have a debt-capital ratio of 70 per cent following this asset acquisition and the debt issue.