The issue was heavily oversubscribed with talk of a total order book around A$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.

"It finally got here," summarized an investor who had met BHP in recent years in the hope of persuading the firm to come back with an Australian bond issue.

All three investors also praised BHP's credit story, and were unconcerned about the recent fall in commodity prices and a slowdown in Australia's mining boom.

"It's an excellent company with great assets and even if it downsizes its production, it will still make large profits," said one, adding that he saw no risk of a downgrade.

One bond holder said he bought the issue for one of his funds which can invest only in Australian dollar bonds.

The issue was jointly managed by Australia and New Zealand Banking Group and Commonwealth Bank of Australia. ($1 = 0.9796 Australian dollars)

(Reporting by Cecile Lefort; Editing by Daniel Magnowski)

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