China Telecom (Hong Kong)'s US$1.65 billion share placement will be enlarged to US$2 billion after strong demand from global investors. Sources close to the placement syndicate said the offering was oversubscribed by 106 per cent. It had received US$3.4 billion in orders from global investors when book building closed early yesterday in the United States. Meanwhile, China Telecom's US$500 million bond issue was four times oversubscribed and was also enlarged, to US$600 million. This lifted the total funds raised to US$2.6 billion, from the originally planned US$2.15 billion. The bond issue was priced at 1.9 per cent above US Treasury bills of the same maturity with a net yield of 7.94 per cent. The placement increment will represent a 21.21 per cent enlargement of China Telecom's original issue plan. The offer was finally priced at HK$24.10, a discount of only 2.4 per cent to the counter's closing price yesterday. It was one of the best pricings seen among blue-chip placement schemes. The stock closed at HK$24.70, up five cents after an intra-day high of $25.25. The US$2 billion raised by China Telecom was the biggest share offer this year, ahead of the Government's HK$10 billion Tracker Fund. Brokers said the response to the offering was a surprise to the market as it was 'far better then expected'. 'Considering it is such a sizeable offering, for it to be able to be oversubscribed and enlarge its size is very good news,' Tai Fook Securities deputy managing director Chan Wing-luk said. He said the well-received China Telecom placement would also help restore investors' confidence in mainland-backed companies. 'China Telecom is always the leader in red chips. It [the response] shows overseas investors have some confidence in the Chinese economy,' Mr Chan said. 'This will help to reduce the selling pressure on red-chip stocks.' The China Telecom response was the reverse of that received by CNOOC's recent initial public offering. CNOOC, the mainland's largest offshore oil producer, postponed its US$2.5 billion offering because of poor subscription. Analysts said the good response to China Telecom was helped by the strong growth potential of the mainland's telecommunications industry, as well as a shortage of scrip. Its parent - the Ministry of Information Industry-controlled China Telecom (Hong Kong) Group - holds a 76.43 per cent interest. The mainland government holds another 4.06 per cent and when other strategic investors' holdings are added, the public float is left at less than 15 per cent. 'Even US$2 billion is not enough to satisfy the demand,' DBS Securities analyst Peter Milliken said. FUND-RAISINGS