News: The issue is backed by 24-month device payments of its customers.
Verizon Communications is planning to raise $1.2bn from the bond market, backed by the issue of phone contracts to around 2.5 customers across the US.
The company is expected to issue the bonds in the third quarter of this year.
Most of the securities to be offered by the wireless carrier are likely to get a triple-A rating by Fitch Ratings, Wall Street Journal reported.
The monthly installments paid by customers who purchased new iPhones and other phones will be used towards interest and principal payments to the bond buyers.
However, the interest rate to be received by the security buyers is yet to be known, as the company has not fixed the price of the bonds.
Earlier, Verizon securitized its handset receivables to raise funds from banks.
The company has joined forces with Bank of America Merrill Lynch, Barclays and MUFG as lead managers for the transaction, which marks its first ever bond issue backed by cell phone contracts, one of the banks managing the deal told IFR.
Verizon chief financial officer Fran Shammo said at a conference last month: "This is new for the industry. The auto industry has been in this market for years, so this is a pretty steady market."
This mode of financing is followed in the auto industry and lenders offering auto loans have been turning them into bonds in the past several years.
Mobile phone companies are starting to follow the model as handsets become expensive and the number of financing plans grow rapidly.
Verizon is backing its issue with the 24-month device payments but not with the service charges it levies monthly on its customers.
Currently, it is the largest cellphone firm in the US, with over 110 million subscribers.