Highly rated companies offered about $12 billion in new bonds Tuesday, after a $12 billion day Monday, as they take advantage of low borrowing costs and investor appetite.

Indeed, a couple companies boosted the amount offered, and most deals saw orders exceeding their size. Robust demand allowed some companies to offer investors a smaller risk premium--less compensation over risk-free Treasurys--than forecast when the deals first came to market. Still, investors, as concerns over European risk ebb, are eager for highly-rated bonds yielding more than government securities.

"All in yields are extremely low, spreads are relatively attractive and almost everyone expects rates to move higher eventually," said Tom Murphy, portfolio manager at RiverSource Investments in Minneapolis. "With corporate America seemingly more sanguine about their business prospects, why not borrow to invest for growth?"

New bond sales had slowed recently amid concerns over Greece's fiscal position. But amid steps to address that situation, and as reports continue to show economic recovery in the U.S., investors are feeling more confident.

"There is a cautious perception that sovereign risk has been somewhat reduced and this gives investors a chance to return to the market," said Scott MacDonald, director of research at Aladdin Capital Holdings in Stamford, Conn.

The largest deal Tuesday came from Swiss pharmaceutical giant Novartis AG (NVS), which increased its three-part offering to $5 billion from $4 billion. Proceeds will finance its acquisition of a 52% stake in eye-care products maker Alcon from Nestle SA (NSRGY, NESN.VX), according to the prospectus.

Other deals include Royal Bank of Scotland Group PLC's (RBS, RBS.LN) $2 billion note, Amgen Inc.'s (AMGN) $1 billion bonds, American Honda Finance's $1 billion issue, and Anadarko Petroleum Corp.'s (APC) $750 million 30-year.

Real estate investment trust ProLogis (PLD) was also marketing $1.1 billion in notes in order to pay down its debt. Denmark's largest bank, Danske Bank AS (DNSKY, DANSKE.KO), was offering a five-year note of at least $500 million. Smaller deals from Georgia Power Co. and Transalta Corp. (TAC, TA.T) were also on tap Tuesday.

Meanwhile, Citigroup Inc. (C) is offering about $2 billion in $25 par 30-year trust preferred securities, or TRUPs, as part of its agreement with regulators on repaying federal bailout funds.

Guy LeBas, chief fixed-income strategist at Janney Capital Markets in Philadelphia, said the tone in the corporate market is "good" and pointed out that deals sold on Monday have also performed well in the secondary market.

Brighter tone has extended to the high yield market, where smaller deals have been in vogue for the past several days, punctuated by an occasional larger issue, such as MGM Mirage's (MGM) $845 million offering of senior secured 10-year notes, announced on Monday.

Also on Monday, Building Materials came to market with $325 million in 10-year notes, and Sonic Automotive Inc. (SAH) said it would sell $210 million of eight-year notes.

-By Romy Varghese, Dow Jones Newswires; 215-656-8263; romy.varghese@dowjones.com

(Anusha Shrivastava, Prabha Natarajan and Michael Aneiro contributed to this report.)
Sonic Automotive (NYSE:SAH)
Historical Stock Chart
From Mar 2024 to Apr 2024 Click Here for more Sonic Automotive Charts.
Sonic Automotive (NYSE:SAH)
Historical Stock Chart
From Apr 2023 to Apr 2024 Click Here for more Sonic Automotive Charts.