Glencore issued $2.2 billion of convertible bonds, bringing the secretive employee-owned Swiss commodities trader closer to a public listing and valuing it at about $35 billion.

The bond sale capped months of speculation that Glencore would seek outside equity investors and perhaps eventually contemplate an initial public offering (IPO).

Glencore sold the bonds, which mature in 2014 and pay 5 percent, to a group of investors including energy-focused private equity firm First Reserve, Government of Singapore Investment Corporation (GIC), BlackRock , and China's Zijin Mining Group <601899.SS> <2899.HK>.

The bonds convert if the firm stages a qualifying IPO or in certain other circumstances, and place an initial pre-conversion equity value on Glencore of $35 billion, it said on Wednesday.

Citigroup and Morgan Stanley advised Glencore.

This transaction, in which Glencore is opening up its equity capital to outside investors, marks an important milestone as we embark on the next stage of our corporate development, the Baar-based company said in a statement.

Neil Beddall, a credit analyst at Barclays Capital, said Glencore was likely to use the proceeds to buy back the Prodeco coal operations in Colombia it sold to sister company Xstrata earlier this year.

Glencore, which sold Prodeco to raise funds to subscribe to Xstrata's rights issue, has an option to buy the business back for $2.25 billion, plus any cash invested by Xstrata and profit made in the meantime.

Led by chief executive Ivan Glasenberg, Glencore is one of the world's largest producers and traders of commodities and raw materials. It holds major stakes in public companies including Xstrata , Katanga Mining and Century Aluminum Co .

(Reporting by Quentin Webb; Editing by Dan Lalor)