More than $15 billion of bonds are on offer in the investment-grade corporate bond market Wednesday, as highly rated companies and foreign banks jostle to raise billions of dollars to fund their operations and repay acquisition-related debt.

Companies were selling $12.4 billion. Consumer goods manufacturer Procter & Gamble Co. (PG) is planning to sell $3 billion in new bonds in three parts. Novartis AG (NVS) is looking for $5 billion through the sale of five and 10-year bonds. Altria Group Inc. (MO), the maker of Marlboro cigarettes, is in the market with a $4.225 billion deal in five-, 10- and 30-year maturities, with the proceeds earmarked to repay money put in place to fund its acquisition of snuff producer UST, according to investors. Sunoco Logistics Partners L.P (SXL) also priced $175 million of new bonds.

Besides corporations, German state development agency KFW and Swedbank (SWDBY) also hit the market for $4.45 billion between them. Swedbank's bonds were guaranteed by the Swedish government.

The willingness of investors to buy into new bond deals has alleviated funding concerns for corporates at the top end of the ratings spectrum.

"There's a lot of cash that needs to be put to work," said Mirko Mikelic, portfolio manager at Fifth Third Asset Management in Grand Rapids, Mich.

It has also allowed highly rated corporates to sell $100.29 billion of U.S. dollar-denominated bonds in January. This marks the best start to a year on record, according to data provider Dealogic, as investors continue to switch out of risk-free Treasurys into higher-yielding corporate bonds and borrowers capitalize on improved sentiment.

On the one hand, the bonds from P&G, Novartis and Altria have all seen good demand because their business models hold up well in an economic downturn. But investors are also piling into these deals because they provide an opportunity for portfolio diversification, said William Larkin, portfolio manager at Cabot Money Management.

"Issuance is still bank and broker-heavy, so getting something a little bit unique outside this sector is going to face strong demand," he said.

Mikelic said companies may be looking to tap the market before the release of the unemployment data Friday, which is expected to be grim.

The new deals are incremental steps in the right direction for a full re-opening of the corporate bond market, according to Larkin.

"The credit markets are saying that we are moving to the other side of this mess," he said.

But Mikelic said bonds from high-quality companies with recession-proof businesses will continue to see demand. Others, meanwhile, will continue to find it more difficult to find willing investors.

"Everyone's looking to be defensive," Mikelic said. "Everything else, good luck."

P&G, Novartis and Altria are expected to price their deals later Tuesday.

- By Kate Haywood and Romy Varghese, Dow Jones Newswires; 201-938-2348; kate.haywood@dowjones.com

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