* Spanish group seeks to preserve investment rating
* Bank Popular prices 2.5-year bond - IFR (Adds prices of Telefonica, Popular bonds)
By Robert Hetz
MADRID, Jan 8 Spain's Telefonica raised 1.5 billion euros ($1.96 billion) on Tuesday via a 10-year bond, the first debt sale this year by a company from southern Europe.
The telecoms group, with debts of 56 billion euros ($73.35 billion) as of September, is facing bond redemptions this year and next and is seeking to preserve a coveted investment grade credit rating.
Telefonica has 7.4 billion euros of debt expiring in 2013 and 7.35 billion euros due for repayment in 2014, according to the company's last quarterly results statement.
In the financial sector, Spain's banks have also been active in the debt market. Last Thursday, BBVA issued 1.5 billion euros in senior bonds, the first bank debt deal of 2013, and a sign of renewed confidence in southern European countries.
Popular, another Spanish bank, raised 750 million euros on Tuesday, with a 2.5-year bond at a yield of 4.125 percent, Thomson Reuters news and analysis service IFR reported.
Telefonica's deal was handled by a group of banks headed by CaixaBank, Goldman Sachs, Mizuho, RBS , Santander and UniCredit. Books opened with an initial price of mid-swaps plus 250 basis points, IFR said. The bond later priced at priced at 230 basis points over mid-swaps.
Investor interest in the deal exceeded 8.5 billion euros, IFR said.
Standard and Poor's affirmed Telefonica's long-term credit rating at BBB, two notches above junk, at the end of December on the assumption the Spanish telecoms group will make more "aggressive" moves to cut debt.
Telefonica scrapped its dividend in July - the first time since the 1930s - and has sold assets, including call centre division Atento, to cut debts. It had targeted debt of 50 billion euros by the end of 2012.
Last month, the group said it was considering listing 15 percent of its Latin America business, a move that could reduce debt by about 6 billion euros.
The group raised about 1.45 billion euros from listing part of its German unit last year.
($1 = 0.7634 euros) (Writing by Sarah Morris; Editing by Louise Heavens and Jane Merriman)