LISBON, April 30 (Reuters) - Portugal Telecom placed one billion euros in seven-year bonds on Tuesday in the largest debt issue by a Portuguese company since the country's 2011 bailout, taking advantage of improving investor sentiment towards the euro zone periphery.
The coupon on the issue was set at 4.625 percent, down from the initial guidance of 4.875 percent, and well below the 5.875 percent on PT's previous 5.5-year bond issue in October 2012.
"This transaction further enhances PT's financial flexibility by extending debt maturities, which, in the current environment, substantially reduces financial risks," the company said in a statement.
Still, PT's shares fell 0.9 percent on Tuesday to 3.961 euros, underperforming the broader market in Lisbon that finished 0.2 percent lower.
Large Portuguese companies began to return to the corporate bond market in September, and in January the country made its first sovereign bond issue since the bailout, which the government hopes will allow cheaper funds to trickle down to the recession hit-economy.
Portugal is in its worst recession since the 1970s, but the government expects meagre growth to return next year when the country is due to exit its bailout programme. Government debt yields are now at levels last seen in 2010, well before the bailout, but still higher than Spain's or Ireland's. (Reporting by Filipe Alves and Andrei Khalip; Editing by James Dalgleish)