Power giant Tenaga Nasional said the trial over its bond option dispute with investment bank UBS Warburg has begun today in London.

In a statement, state-owned Tenaga said it believes it has a "very strong case and it expects to succeed in the trial" in which it was countersuing UBS for misrepresentation and breach of duty.

The dispute emerged last year when UBS sued Tenaga for US$86.94 million for unilaterally terminating two options relating to a 10-year, US$500 million Yankee bond issue in 1997 conducted by Union Bank of Switzerland, the predecessor of UBS Warburg.

Tenaga said it was not liable and filed a counterclaim alleging UBS negligently advised and misrepresented the facts both at the time when the deals were entered into and in the period leading to the termination of the transactions by Tenaga.

The battle is likely to be closely scrutinised by other Asian issuers, many of whom may have entered into similar deals in 1996 and 1997, just before the regional financial crisis, when spreads were low for Asian borrowers and US interest rates stable. - AFP