By Mike Cherney 

In the race to tap bond investors for cash, Medtronic Inc. has outdone Apple Inc. and Alibaba Group Holding Ltd.

The Minneapolis medical-device maker completed the largest corporate-debt sale of the year Monday, raising $17 billion in a deal that underscores the booming investor appetite for highly rated bonds. The sale will enable the company to finance its $43 billion purchase of Ireland's Covidien PLC in a transaction structured as a so-called inversion, a type of deal that affords tax benefits but recently came under fire from U.S. policy makers.

The Medtronic bond sale brings issuance so far this year to roughly $1.5 trillion, putting 2014 on pace to be the third record year in a row, according to data provider Dealogic. The figure includes sales of debt of all ratings in the U.S.

This year's biggest corporate-bond deal had been Apple's $12 billion sale in April. Medtronic also topped Alibaba's $8 billion offering last month.

The pace of bond sales shows little sign of abating. Internet retailer Amazon.com Inc. indicated that it plans to sell bonds on Tuesday, its first deal in two years. No size was given.

Companies are borrowing at a hectic clip to take advantage of low interest rates and are using the cash to finance everything from mergers and acquisitions to share buybacks. The size of the Medtronic bond deal was bigger than some market watchers expected, a sign that investors are scrambling to snap up relatively safe debt that offers higher yields than Treasurys and other developed-country government bonds.

Highly rated U.S. corporate debt has been among the best-performing categories of fixed income so far this year as global growth concerns have kept bond yields broadly subdued.

Yields on the Medtronic bonds were lowered throughout the day, an indication of strong investor demand. A 10-year bond was initially offered to yield roughly 1.55 percentage points more than benchmark Treasurys, but was priced at a spread of 1.40 percentage points, for a total yield of 3.613%. The company sold bonds of maturities between three and 30 years.

The bond sale attracted $45 billion in orders, according to a person with knowledge of the process.

"The cost of financing is attractive for corporations," said Jerry Cudzil, head of U.S. credit trading at TCW, which oversees $155 billion and put in an order for the Medtronic bonds. "What this tells you is that the market remains fairly open."

Some investors said they bought the Medtronic bonds because the debt offered greater yield than the company's outstanding bonds. Money managers also said they believed the acquisition of Covidien, which also makes medical devices, would benefit Medtronic over the longer term. The bond sale was led by Bank of America Merrill Lynch, Deutsche Bank AG and J.P. Morgan Chase & Co.

The bonds were given a provisional rating of A3 by Moody's Investors Service, one notch below where the company was previously rated, but still well within investment grade.

"We see a pretty significant upside in this if you look at other A-rated names in health care" and pharmaceuticals, said Bert Zimmerman, senior fixed income analyst at Principal Global Investors, which oversees about $322 billion and put in an order for the Medtronic bonds.

Medtronic, which struck the deal to take over Covidien in June, previously said it planned to use $13.5 billion in cash held by its foreign subsidiaries. However, a tax-rule change made by the Obama administration in September made it more costly for Medtronic to access that cash, prompting the firm to turn to U.S. credit markets instead.

Medtronic has said it plans to switch its domicile to Ireland after the takeover is completed to take advantage of lower corporate-tax rates overseas.

Other big corporate-bond sales this year came from French cable operator Numericable Group, which in April sold $10.9 billion in debt, and Oracle Corp. which sold $10 billion in June. The largest corporate-bond sale on record came in September 2013, when Verizon Communications Inc. sold $49 billion.

In April 2013, Apple sold $17 billion, which is now tied with Medtronic for the second largest.

Write to Mike Cherney at mike.cherney@wsj.com

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