APA sets margin on $140 mln U.S. private bond issue

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SYDNEY, May 14 (Reuters) - APA Group Ltd (APA.AX),
Australia's biggest natural gas pipeline investor, has set the
margin on a $140 million U.S. bond private placement that will
help repay debt, it said on Thursday.

"The transaction is consistent with our intention to
progressively move to a position whereby no more than 20
percent of debt will mature in any financial year," said Ross
Gersbach, APA's chief financial officer in a statement to the
Australian stock exchange.

The offer will settle early July following the finalisation
of documentation and investor due diligence.

The issue consists of $65 million in seven-year fixed rate
notes paying a coupon of 8.35 percent and $75 million of
10-year fixed rate notes paying a coupon of 8.86 percent, APA
said.

Both tranches paid a margin of 575 basis points over
equivalent U.S. Treasury notes, it said.

A total of seven investors, mostly holders of APA's
existing debt, participated in the raising arranged by Royal
Bank of Scotland, a company spokesperson said.

APA Group is a regular borrower in the U.S. private
placement market, having raised $650 million equivalent in 2007
and $325 million equivalent in 2003, according to Reuters data.

The U.S. private placement market is a popular source of
funds for Australian companies looking for long-dated debt,
with eight companies raising nearly $2 billion there in 2008.

APA is the third local borrower this year to tap that
market following issues from logistics firm Brambles (BXB.AX)
and oil refiner Caltex Australia (CTX.AX).

Typical buyers of U.S. traditional private placements are
"buy and hold" U.S. insurance companies keen on long-dated
paper to match their assets.
(Reporting by Cecile Lefort)