* Bond launched at 325 bps over U.S. Treasuries - arrangers

* Batelco's debut bond issue

* Demand for bond seen healthy

(Adds launch details)

DUBAI, April 29 (Reuters) - Bahrain Telecommunications Co

BTEL.BH (Batelco) will sell a $650 million seven-year bond on Monday, after attracting healthy investor demand for its debut global debt markets deal.

The bond launched at a spread of 325 basis points over U.S. Treasuries, lead arrangers for the deal said on Monday.

That's at the lower end of the guidance range of 325-335 bps released earlier in the day, indicating demand for the issue was strong.

Previous guidance had been that the bond might be issued at a spread of 350 basis points over U.S. Treasuries. But market players said that was too generous for an issue with a credit rating only one notch below Bahrain's sovereign rating, particularly as Batelco is majority state-owned.

"The 350 bps was pretty wide - around 70 bps off the sovereign - given it's just one notch down and telcos usually trade pretty tight to sovereigns. It was always expected to tighten," said one Gulf-based banker not on the deal.

Official pricing of the bond is due later on Monday.

Batelco, 78 percent owned by the Bahraini government, is expected to use proceeds from the bond to cover part of a funding package for its $1 billion acquisition of Cable & Wireless Communications' CWC.L assets in Monaco and other island states.

The company completed part of the acquisition earlier this month. ID:nL5E8N30YQ ID:nWEB002DR

BNP Paribas BNPP.PA and Citigroup Inc C.N are mandated lead arrangers on the deal.

As part of the funding package, Batelco took out a 10-month $650 million bridge loan in December last year from the same two banks.

(Reporting by Rachna Uppal and David French; Editing by Mark Potter)

((rachna.uppal@thomsonreuters.com)(+971 4 366 4240)(Reuters Messaging: rachna.uppal.reuters.com@reuters.net))

Keywords: BAHRAIN BATELCO/BOND