Telephone companies, hardly renowned as movers and shakers in the corporate bond market, are stepping up their debt financing now that interest rates are again heading north.

Wall Street underwriters have priced more than $1.5 billion of phone paper over the past week alone, and market players say more offerings may be in the offing as phone companies try to outrun rising borrowing costs.

"What you're seeing is a lot of refinancing of short-term debt," said Marion Boucher, vice president at Donaldson, Lufkin & Jenrette Securities Corp. "There's also a lot of maturities coming up ... and a few companies have finally called or redeemed their high-coupon debt."

That is just what Pacific Bell did yesterday, becoming the fifth phone credit to tap the bond market in eight days.

While most corporate players were sleepwalking through another quiet session, Pacific Bell took advantage of a steep yield curve with $200 million of 10-year notes sold through a competitive bid.

A Lehman Brothers team won the issue, reoffering the securities as 8.70s at 99.473 to yield just 45 basis points over the Treasury curve. That gave Pacific Bell a net interest cost of 8.808%.

Moody's Investors Service rates the issue Aa3; Standard & Poor's Corp. rates it AA-minus.

"The company is going to use the proceeds to refinance $200 million of 11 3/8% debentures due in 2024 that we called on April 1," said a treasury official at Pacific Telesis Group, Pacific Bell's parent.

Telephone companies often lock in debt financing for 30 years or more, but with the Treasury's 10-year note yielding about 8.35% late yesterday and the yield curve sporting a slope of 283.1 basis points, Pacific Bell only ventured out 10 years.

They are not alone. Of the more than $4.5 billion of corporate debt issued last week, just $500 million was longer than 12 years, while nearly $1 billion was crammed into the 10-year sector.

"We certainly perceived a window," the PacTel official said, noting that yields in the 10-year area were "most compelling."

With yesterday's deal, Pacific Bell joined the ranks of Northern Telecom, GTE Corp., Southwest Bell, and Ameritech Capital Funding -- all recent issuers.

But that may be just the beginning.

In the next few weeks, "everybody and his brother are going to be in the market," said Frank Plumley, vice president at Standard & Poor's Corp. "Most of these [telecommunications] companies are in the position where they can control the timing of their issuance, and a lot perceive this as an opportunity."

To be sure, telephone bonds, regarded as among the safest corporate credits, do not set the hearts of yield-hungry investors a-twitter.

And lately, the sector has put in a poor showing, returning just 0.37% in May, according to Salomon Brothers Inc. Compared with bank bonds -- the corporate leaders, with a 0.78% total return -- phones look miserly.

But over the past 12 months, the slow-but-steady phone sector has handed back 13.66%, outpacing the hot-shot bank sector by about 150 basis points.

"What's safer investment than a phone company if the recession extends?" said Bruce Eliot, vice president at Houlihan Lokey Howard & Zukin Investment Management in Los Angeles. "Phone companies are low volatility businesses."

That may be the standard line from many investors, but "I don4't adhere to it," said Donaldson's Ms. Boucher. "The reality is that the market is realizing that these companies are far more complex and far more diversified than people have anticipated.

She continued: "A lot of the financials don't look the great. People are looking a little more closely, issues are trading weaker and weaker, and this increase in supply has hurt."

Traders, however, are quick to note that the recent deluge of supply has not pressured spreads much, largely because the issues have been staggered across the yield curve. That was not the case in 1986, when a drop in interest rates prompted many phone companies to issue 40-year paper, raising risk premiums.

Pacific Bell, the weakest sibling and most frequent borrower in the Bell family until the American Telephone & Telegraph break-up in 1984, is now outperforming its old Bell sisters.

"It's well managed and seems to have done a good job of diversification," Ms. Boucher said. "They really learned how to operate on their own, [so] at the time of the divestiture it wasn't so much of a shock."

Short-term, the credit outlook for the telephone industry remains stable, but "there are some clouds" on the horizon. Standard & Poor's Mr. Plumley said. The usual litany of troubles includes increasing competition and declining protection from regulators for these companies' revenue streams.

"What we're looking at is a situation where we've got a monopoly cost-plus industry evolving into a much more competitive type of business," Mr. Plumley said. "One would expect the companies will have to be financially stronger to maintain their current ratings."

The Pacific Bell deal was the only issue to hit the corporate market yesterday, where seasoned highgrades slipped 1/8 point in exteremely thin trading. Junk bonds, undermined by a 23.93 slide among the Dow Jones industrials, slipped 1/4 to 1/2 point.

Meanwhile, Westinghouse Credit Corp., the troubled finance arm of Westinghouse Electric Corp., turned to the non-underwritten market with $100 million of two-year medium-term notes. Lehman Brothers priced the offering as 7 3/4s to yield 81 basis points more than comparable Treasuries.

The noncallable notes are rated A2 by Moody's and A by Standard and Poor's Corp.

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