GERMANY - At least one German pension fund has signed up to buy some of the E3bn in new bonds set to be sold by telecoms giant Deutsche Telekom, bank sources say.

Banking sources in Frankfurt said that so far, Deutsche Telekom’s bond sale had only attracted one German pension fund - from the ecumenical sector. The sources did not disclose the name of the pension fund nor how much it planned to invest.

The sources said other German subscribers to the bond sale included insurers, Sparkassen (state-owned savings banks) as well as investment fund managers and banks that were likely to re-sell them to retail clients.

The sources also said Bonn-based Telekom’s bond sale, which included five- and ten-year notes, was already oversubscribed, adding that the strong order flow had not yet subsided.

However, the sources doubted that the company would increase the volume of the sale above E3bn - despite strong investor demand.

Deutsche Telekom itself has provided few details on the sale, saying in a statement that the proceeds would enable it to shore up its liquidity reserve while not raising a current debt level of around E40bn. The firm’s long-term debt is rated just below investment grade.

Brokers at the Belgian bank Fortis reckon that the spread on Deutsche Telekom’s bonds will be around 70 basis points above the interest rate for German government bonds, which is currently 3.60%.

A Deutsche Telekom spokesman declined to comment further on the bond sale, saying not all of its terms had been decided.