Nov. 5 (Bloomberg) -- Telefonos de Mexico SAB sold $500 million of 10-year bonds overseas as the country’s biggest land- line phone company tries to stem a decline in subscribers, according to a person familiar with the transaction.

Telmex, as the company is known, sold the bonds to yield 2 percentage points above U.S. Treasuries, said the person, who declined to be identified because he’s not allowed to speak publicly. Bank of America Corp. and HSBC Holdings Plc arranged the bond sale, said the person. Moody’s Investors Service today rated Telmex’s bonds A3, the fourth-lowest investment grade.

“The ratings are based on the company’s strong market position in Mexico,” Moody’s said in a statement. “The ratings take into account, however, the pressure on Telmex’s revenues and margins. An uncertain regulatory environment is an additional risk factor.”

The Mexico City-based company controlled by billionaire Carlos Slim solds bonds after reporting last month a 12 percent decline in third-quarter profit as customers switched to voice plans offered by wireless and cable-television carriers. Mexico’s antitrust agency said last month that Telmex dominates the market for completing telephone calls, a finding that may lead to tighter regulation.

A Telmex spokesman declined to comment.

Telmex is taking advantage of declining borrowing costs amid speculation the global economy is recovering. The yield on the company’s 5.5 percent bonds due in 2015 fell to 4.66 percent from 7.38 percent on March 10, according to Bloomberg data. The price rose to 103.84 cents to the dollar from 91.16 cents during that period.

To contact the reporter on this story: John Detrixhe in New York at jdetrixhe1@bloomberg.net; Veronica Navarro Espinosa in New York at vespinosa@bloomberg.net

Last Updated: November 5, 2009 15:56 EST