UPDATE 1-UOB establishes $1.06 bln Islamic debt programme in Malaysia

(Adds details of the Islamic debt offering from paragraph 2 to 7)

SINGAPORE, Jan 25 (Reuters) - Singapore's United Overseas Bank (UOB) said on Thursday that its Malaysian unit UOB Malaysia has established a 5 billion ringgit ($1.06 billion) Islamic debt programme in the country.

As part of the programme, UOB Malaysia priced its debut tier 2 sukuk, or Islamic bond, due in February 2034 and callable in February 2029, at par to yield 4.01%, UOB said in a statement.

At 45 basis points above the benchmark Malaysian government securities, UOB said this was the tightest spread ever recorded for a tier 2 capital instrument in the ringgit-denominated market.

The Islamic debt offering received was oversubscribed by about 3.39 times, it added.

"The oversubscription and the tight pricing achieved reflects investors' confidence in UOB Malaysia's solid financial position," UOB Malaysia Chief Executive Officer Ng Wei Wei said in the statement.

UOB said 42 investors including insurance companies, fund managers, government linked investment companies, banks and private banks had subscribed to the offering.

CIMB Investment Bank and UOB Malaysia were joint principal advisers, lead arrangers and lead managers for the deal, the statement showed. ($1 = 4.7290 ringgit) (Reporting by Yantoultra Ngui; Editing by Christopher Cushing and Jamie Freed)