Bonn-based Deutsche Telekom, Europe's No. 1 phone company and the third largest in the world, offered generous yields and attracted strong investor interest, allowing it to nearly double the size of the sale from an original $8 billion. More than 600 institutional investors bought the bonds, due in part to a strong appetite for bonds in the burgeoning telecommunications sector.

"It's in a very popular sector, and as market momentum and sentiment turned positive, there weren't enough corporate bonds to satisfy retail investors' needs," said Ruth Mulligan, who helps manage $7 billion as vice-president, fixed-income at Massachusetts Financial Services Co in Boston. The sale dwarfed by 49 per cent last year's sale by Tecnost International NV, making it the world's largest bond offering. That sale totalled 9.45 billion euros, or $9.77 billion.

Deutsche Telekom's bond, offered in four currencies, included $9.5 billion in dollar-denominated bonds, surpassing last July's record sale of $8.6 billion by Ford Motor Credit Co, the financing arm of Dearborn, Mich-based auto giant Ford Motor Co.

Deutsche Telekom had never sold dollar-denominated bonds before, enhancing the bonds' appeal to investors looking to add a new name to their portfolios.

"This was really a debt IPO," said Randy Snook, head of investment-grade bond syndication at Goldman Sachs & Co, one of three banks arranging Deutsche Telekom's sale, likening the sale to an initial public offering of stock.

Investors bought the bonds even though they had already absorbed more than $41 billion of new US high quality corporate bonds in June, amid comfort that interest rates are now more stable. Rising rates cause the value of most bonds to fall.

Deutsche Telekom found plenty of demand even though investors expect its credit ratings to fall as it expands. Indeed, Moody's Investors Service said last week it may cut the company's gilt-edged Aa2 senior debt rating, while Standard & Poor's has a negative outlook for the company's AA-minus senior debt, roughly one notch lower.

"I expect them to end up as an A-rated company with a respectable global market share, and for that this sale appears to be fairly priced," said Thomas Donne, who bought some 10-year notes to add to the $1.9 billion he manages for Banc One Investment Advisors Corp in Columbus, Ohio. "Our allocation was fair," he said. "I wish I had more."

Deutsche Telekom's dollar-denominated bonds included $3 billion of five-year notes yielding 7.795 per cent, $3 billion of 10-year notes yielding 8.052 per cent and $3.5 billion of 30-year bonds yielding 8.257 percent. Investors showed the greatest demand for the 10- and 30-year debt. The company sweetened its sale by promising to raise its bonds' coupons 50 basis points - half a percentage point - if Moody's and S&P Cut their ratings several notches, respectively to Baa1 and BBB-plus. Once trading of Deutsche Telekom's bonds began, they outperformed the bonds of competing telephone companies such as AT&T Corp because traders sold those other bonds to make room for Deutsche Telekom's bonds in their portfolios.