Merrill Lynch & Co. last week completed a $410 million financing package for Teligent Inc.-one of the most closely watched companies in the junk bond market.

Led by Alex Mandl, the former president of AT&T Corp., Vienna, Va.-based Teligent is a competitive local exchange carrier, or 'CLEC.' CLECs, which uses wireless technology to provide local and long distance telecommunications services, are considered one of the fastest growing sectors of the red-hot telecommunications market.

Teligent issued $300 million worth of high-yield bonds and $110 million worth of equity in an initial public offering on Thursday. The company originally planned to raise $400 million in junk bonds, but changed its plans when that market appeared overcrowded with new deals, a spokesman said.

In addition to the public offerings, Nippon Telegraph and Telephone Corp. put $100 million of equity into the company, and equipment maker Northern Telecom Ltd., provided $780 million in vendor financing.

Teligent was founded in 1996 by Telecom Ventures and Associated Group Inc., a Pittsburgh-based wireless communications equipment company. The company expects to be up and running in 10 markets by the end of 1998 and to ultimately reach 74 markets.

As a start-up, Teligent will have negative operating cash flows over the next four to five years. Proceeds from the debt and equity commitments are expected to cover those losses over the next two to three years.

Telecom companies are among the fastest growing parts of the high-yield bond market. Experts estimate that 15% of all new junk issues this year have been from telecom companies, up from 2% four years ago.

Worldwide deregulation is encouraging the growth of CLEC companies, as barriers to entry in markets like Europe are coming down, says David Wells, telecommunications analyst with Societe Generale Securities Corp.

"Technological progress and the consumerization of these services will make this a pretty active sector in the next few years," Mr. Wells said."CLECs are a sector that the market has been in love with for a while."

While investors have some concerns about CLEC technology, Teligent has a good management team, which made its issues attractive, he added.

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