Banking sources said a mandate for the issue has been awarded to Goldman Sachs and Salomon Smith Barney to be joint book runners. The proceeds are expected to fund SingTel's expected acquisition of a 22.3 per cent stake in Indonesia's Telkomsel worth US$600 million from KPN Telecom.

The funds could also be used to pay part of the estimated S$8 billion (HK$34.3 billion) in borrowings incurred by SingTel after its US$9 billion purchase of Australia's second ranked Cable & Wireless Optus this year.

Analysts say they expect SingTel, in which the government holds a 69 per cent stake, to continue to be in acquisition mode for telecoms firms in Hong Kong and Malaysia, and the funds would come in handy.

If the planned deal hits its target size it will rank alongside OCBC Bank's US$2.1 billion deal, completed in July, as one of the largest this year. However, OCBC's deal was in a range of currencies and as a US dollar deal, the SingTel bond would match Hutchison Whampoa's record US$2 billion offering in 1997 as the largest from Asia.

"I think there will be good investor appetite for the bonds. It is a well-known name," said Low Teck-Hoon, a fixed income analyst at ABN Amro in Singapore.

A Singapore capital markets specialist said: "It will be a challenge in today's environment, but it is a question of pricing. And even though it is a global issue, I expect Asian investors to come into this issue in a big way."

Analysts said it was difficult to predict the pricing of the bonds as SingTel is not yet rated.

Some expect the telecoms company to be rated similarly to Hutchison Whampoa, which has an A foreign-currency rating from S&P and Australia's Telstra, an A-plus.

"In my personal opinion, it should be rated as single A in line with Hutchison," Mr Low said.

Another banker in Singapore said SingTel was much more like Telstra: "Probably AA-minus or A-plus. The perception is that SingTel is in a slightly stronger position in its domestic market than Telstra and probably enjoys slightly better government support too."

Traders in Hong Kong expect the bonds to be priced tighter than the Hutchison US$1.5 billion 10-year bond launched this year, which now trades about 225-230 basis points over comparable US Treasuries. They said the SingTel pricing could come in about 180 basis points above the comparable 10-year Treasuries.

"We expect some pressure on Hutchison bonds, although totally undeserved in our opinion, due to this deal," said Raja Visweswaran, head of Asian credit research at Bank of America.