FRANKFURT/MADRID, Oct 30 (Reuters) - Shares in Telefonica's O2-branded German unit were trading above their initial public offering price in unofficial trading on Tuesday, before their listing, Europe's largest in more than a year.
Shares in the telecom provider, which were placed with investors for 5.60 euros each on Monday, saw bids and offers ranging between 5.63 euros and 5.75 euros at 0715 GMT.
``Trading volumes are modest,'' said a Frankfurt-based trader. ``It is good they lowered the range again. We may see a plus in trading today.''
Shares will start trading officially at 0800 GMT in Frankfurt.
On Monday, Telefonica priced the sale of Telefonica Deutschland shares in the lower half of its indicative range, raising as much as 1.45 billion euros ($1.87 billion).
The biggest IPO in Europe since Spain's Bankia raised 3.1 billion euros in July 2011 is part of Telefonica's bid to cut debt and keep its investment grade rating.
Europe's largest telecoms company had originally set an indicative price range of 5.25-6.50 euros per share for the offering. That guidance was narrowed twice during two weeks of bookbuilding, latterly to 5.50-5.60 euros.
Telefonica, which must raise 7-8 billion euros a year through 2015 to cover debt repayments, is under pressure to pare 58 billion euros of debt in order to save its investment grade rating and avoid spiralling debt financing costs.
The firm faces the prospect of a downgrade if its crisis-hit home market of Spain, rated just one notch about junk status by Moody's and Standard and Poor's, slips into non-investment territory.
Telefonica has made some disposals this year - it shed some of its stake in China Unicom in June and sold its Atento call centre business to U.S. private equity firm Bain Capital for around 1 billion euros, including debt, earlier this month.