Pharmaceutical giant Pfizer Inc. (PFE) sold its $13.5 billion, multi-part offering in the U.S. corporate bond market to help fund its $68 billion acquisition of health-care company Wyeth (WYE).

Pfizer's offering, rated triple-A by Standard & Poor's and two notches lower by Moody's Investors Service, was attractive to investors clamoring for investment-grade bonds from companies with little debt and those that can best weather economic downturns. This helped narrow risk premiums on the bulk of the bonds from original expectations.

Orders for the deal totaled around $28 billion, from more than 1,000 individual accounts worldwide, according to a person familiar with the transaction.

Pfizer's deal is the latest in the sector to tap the U.S. high-grade market for funds amid a flurry of merger and acquisition activity in the pharmaceutical industry. Last month, Roche Holding AG (RHHBY) raised a record $16.5 billion in the bond market to finance its purchase of Genentech Inc. (DNA). Pfizer's offering is the second-largest U.S.-dollar denominated deal, according to data firm Dealogic.

"Investors are looking for investment-grade names even though we have had good supply," said Daniel Sheppard, director at Deutsche Bank Private Wealth Management. "There's still good appetite for such paper."

And other kinds of investors, such as those who had typically bought loans, stocks, high-yield bonds or emerging-market debt, have increasingly put their cash to work in investment-grade products. "We're finding more and more people upgrading their portfolios by buying quality paper, and it doesn't get much better than Pfizer," said David Trahan, managing director at the investment-grade syndicate desk at Citigroup, one of the underwriters of the deal.

 
   Rapid Refi

With banks' lending capabilities limited, many companies are choosing to tap hungry investors for funds to refinance portions of temporary financing, known as bridge facilities, sooner rather than later. Pfizer completed syndication of its bridge loan only at the end of last week. In other cases, companies are skipping the bridge loan altogether. Roche, for example, opted to pre-fund its acquisition in the bond market first before securing financing in the loan market.

And there's more big pharma debt on tap. Merck & Co. (MRK) plans to sell bonds to partly refinance its $8.5 billion bridge loan secured to buy rival Schering-Plough Corp. (SGP). Merck agreed last week to buy Schering-Plough for $41.1 billion.

Consolidation in the pharmaceutical industry is being driven by a wave of expirations of patents for blockbuster drugs, exposing them to competition from cheaper generic versions. At the same time, companies have hit numerous setbacks in recent years finding successful new drugs to replace the lost revenue.

The rationale behind the combinations is to generate big cost savings, to beef up pipelines of experimental drugs, and to diversify into areas outside of traditional prescription drugs, such as consumer health products and biotechnology-style drugs. What remains an open question is whether the latest round of consolidation will avoid the same fate of some industry mega-mergers earlier in this decade, which disrupted research efforts and hurt stock price performance.

Pfizer's shares were about flat at $14.13.

Pfizer's two-year, floating-rate $1.25 billion notes were priced at 195 basis points over the three-month London interbank offered rate, or Libor, according to a person familiar with the deal.

The $3.5 billion, three-year, fixed-rate bonds were sold at 305 basis points over Treasurys to yield 4.5%. Guidance was in the 310 basis points over Treasurys area.

The $3 billion, six-year portion sold at 340 basis points over Treasurys to yield 5.375%. Guidance was in the 345 basis points over Treasurys area.

The $3.25 billion, 10-year part priced at 325 basis points over Treasurys to yield 6.214% versus guidance of 330 basis points over Treasurys area.

The $2.5 billion, 30-year bonds were sold at 345 basis points over Treasurys to yield 7.205%, versus guidance of 350 basis-point area.

"You very rarely get to buy paper of this quality in big size," said Citi's Trahan.

Joint leads on the deal were Citigroup Inc. (C), Barclays PLC (BCS), Bank of America/Merrill Lynch (BAC), Goldman Sachs Group Inc. (GS) and JPMorgan Chase & Co. (JPM).

Pfizer spokeswoman Joan Campion wasn't immediately available after the bond pricing.

Pfizer last sold a $1.45 billion deal on Jan. 27, 2004, according to Dealogic.

New bond issuance from investment-grade corporations is expected to continue apace, said Suki Mann, credit strategist at Societe Generale. "It is likely motivated by the need - or desperation - to shore up liquidity (and pre-fund maturing obligations) into a possibly worsening economic environment."

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

-By Anusha Shrivastava, Dow Jones Newswires; 201-938-2371; anusha.shrivastava@dowjones.com

(Kate Haywood and Peter Loftus contributed to this report.)