Bermuda-based Flag Ltd. yesterday announced it has completed permanent financing for its undersea fibre optic cable system, which it calls the world's longest.

The financing is made up of $430 million in 8.25 percent 10-year notes and bank debt of $370 million. The notes and bank debt replace the interim financing of $950 million in bank debt that was used for the construction of Flag's international telecommunication network.

Flag chairman and chief executive officer Andres Bande said the offering was oversubscribed and that strong sales of capacity on the cable had helped the company reduce the bank debt from its original $490 million commitment.

"Such a high level of interest indicates the confidence investors have in Flag and its business model,'' Mr. Bande said in a press release. "Flag offers carriers secure, unique pricing, with market-based prices and a wealth of flexible options.'' Flag links Europe, Asia and the Middle East with high capacity digital services launched on November 22. By December the company has sold about seven percent of the available capacity of the $1.5 billion, 17,000-mile cable to 66 international long-distance phone companies including the UK-based Cable & Wireless Plc, Japan's KDD Ltd., China's China Telecom Ltd, MCI Communications Corp. and AT&T Corp.

That's about one-third of what the company needs to sell before breaking even -- a threshold Flag should cross in three to four years, the company said.

Demand for instantaneous worldwide communications services continues to grow.

International phone traffic, excluding private-line calls, is increasing by about 14 percent a year, and global Internet traffic has doubled every year for the past ten years, company spokesmen said previously.

Flag -- the name is an acronym for "fibre-optic link around the globe'' -- can send the equivalent of 600,000 simultaneous telephone conversations through cables that snake their way under water to 13 points in 11 countries.

"We have succeeded in building and launching a much-needed digital communications system for some of the world's fastest-growing markets,'' Mr.

Bande said. "With our financing complete, Flag now stands on its own as a going concern of great promise.'' The landing points are managed by phone companies in each country which provide a link to telephone networks and access for other carriers. Flag said it can reach about 75 percent of the world's population.

Flag has 25 staff based at its corporate headquarters in Bermuda.

Salomon Smith Barney was the lead manager on the high-yield offering, running the book, while Barclays Capital was co-lead and Morgan Stanley Dean Witter was co-manager. Barclays Capital arranged the bank financing.