LONDON: Europe’s biggest engineering conglomerate Siemens launched a four-pronged bond market attack yesterday as it moves to fund a 3-billion-euro share buyback announced in early August.

The German group opened order books on dual-tranche two-and long seven-year euro-denominated bond and a dual-tranche three-and 30-year sterling-denominated bond which will fund the majority of its share buy-back due to be executed by December 30 2012.

The company is the latest in a string of issuers taking advantage of strong investor demand for corporate names and historically low rates to shareholders’ benefit.

This is despite the fact that Siemens posted a major drop in quarterly new orders as customers put off investments due to Europe’s crisis.

The company said that its full year goals would be hard to meet as even major sales to China were becoming rare.

Shortly after 0700GMT, the German group opened order books on the euro tranches, testing investor appetite in the 5bp over mid-swaps area and the 20-25bp over mid-swaps range, for the respective parts.

Siemens, rated Aa3/A+, mandated Barclays, Bank of America Merrill Lynch, Deutsche Bank, Goldman Sachs and Societe Generale to run the deal, for pricing later in the day. The shorter tranche is expected to be sub-benchmark in size, or smaller than EUR500m, and the longer benchmark-sized, lead managers on the deal said.

Just minutes later, books were opened on the dual-tranche three-and 30-year sterling-denominated bonds, and investor appetite is being tested in range of Gilts +95-100bp and Gilts +90-95bp.

Barclays, BNP Paribas, Deutsche Bank and UBS were mandated to run that deal and both tranches are expected to be benchmark in size.

Bankers said there was a good chance that the tranches would be increased on the back of strong demand for the paper, meaning that the total value of all tranches could easily exceed EUR2bn equivalent.

Siemens was last in the euro market more than three years ago with a dual-tranche 2013 and 2017 bond in February 2009. Its only outstanding sterling bond is a 6.125 percent September 2066 bond which it priced in September 2006, as part of a dual-currency dual-tranche deal.

Aside from those notes, the company also has outstanding euro paper maturing in June 2014, June 2018 and September 2066, and US dollar paper due in March 2016 and October 2016.

Pre-announcement spreads of those notes, imply negative or very low single-digit new issue premiums on both tranches of the euro deal, observers said.

Using similarly rated paper firm Linde, Roche and Nestle also implies a concession of just 2bp or 3bp on the longer tranche, one observer said.

The existing sterling offering is relatively illiquid, limiting its value as a comparable, bankers agreed.

One observer gave a vague estimate of 5-10bp on both tranches, but warned that it was hard to determine based on the lack of reference points.

Around an hour after books all tranches had been opened, sources said that the bookbuilding was going well, suggesting that guidance could be revised shortly.