UPDATE 1-Siemens raises 750 mln euros in 2-part bond tap

By Natalie Harrison

LONDON, Aug 21 (Reuters) - Germany's Siemens (SIEGn.DE) raised 750 million euros ($1.11 billion) in the debt market on Thursday, adding to a dual-tranche euro bond it sold just two-and-a-half months ago.

Siemens added 400 million euros to its existing 2018 bond DE036946164= and 350 million euros to its 2011 bond DE036946130=, with both so-called "taps" coming in tighter than initial price guidance and bigger than expected.

Each deal was originally expected to be around 200 million euros, one of the leads on the deal said earlier on Thursday.

"Taps are not unusual at all, but this is a reasonable size," said Ian Robinson, head of credit strategy at major UK investor F&C Asset Management.

"My guess is that they've had some investors ask if they would be willing to issue any more and they managed to do so at a slightly lower yield than when they first issued it," he said.

Guidance on the 2011 bond tap was cut to 38 basis points over mid-swaps from an initial 40 basis points. In contrast, the company paid mid-swaps plus 48 basis points when it launched the 1.2 billion euro outstanding bond in early June.

Likewise, guidance was tightened on the 2018 bond tap to mid-swaps plus 79 basis points, down from 80. It paid 85 basis points over mid-swaps in June, which was also 1.2 billion euros in size.

Siemens also raised 1 billion euros via a 6-year euro bond at the same time.

"The bonds have performed reasonably well since June and have tightened in, both against swaps and also against Bunds," said Robinson.

"The advantage of doing a tap is that it makes the particular bond more liquid, and if you only did 400 million euros for a new issue, some investors might think that size is too small."

A trader said the outstanding bonds moved wider because of the tap issues. Credit default swaps on Siemens moved about 3 basis points wider to about 70 basis points, in line with the broader market, he said.

"What is surprising is that Siemens has done so much funding. They also raised about 1 billion euros in the Schuldschein market just a while ago," said the trader.

Deutsche Bank and Goldman Sachs were lead managers on the bond sale.

Siemens is rated AA- by Standard & Poor's, A1 by Moody's Investors Service and A+ by Fitch Ratings.

The corporate primary market has seen a seasonal slowdown in issuance but bankers are predicting a pick-up in volumes when the market traditionally opens again in September.

One banker at a U.S. bank based in London said supply would probably be kick-started by supra-sovereigns next week, before the U.S. Labour Day holiday on September 1.

(Editing by Elaine Hardcastle)