Actavis is set to sell $21bn of bonds on Tuesday in the second-largest corporate debt offering on record, as part of its $66bn acquisition of Botox-maker Allergan.
As bankers managing the sale started to market the securities at the start of the week, interested investors across the globe pushed orders to a whopping $90bn, people familiar with the offer said.
JPMorgan, Mizuho and Wells Fargo are the banks acting as joint book-running managers of the sale.
The deal is the second-largest after Verizon sold $49bn of bonds in September 2013 to finance its $130bn acquisition of a stake in Verizon Wireless. Orders for Verizon's bond sale surpassed the $100bn mark.
Actavis's offer will be split in 10 parts, with bonds carrying fixed and floating ratings, with maturities ranging from 18 months to 30 years, according to a company filing with the Securities and Exchange Commission.
The longer-dated portion is expected to be sold at yields more than 2 percentage points higher than comparable 30-year US Treasury bonds, people familiar with the sale said, boosting the allure of the securities.
"It is an enormous deal," said Michael Kastner, a managing principal at Halyard Asset Management.
"I'm always a bit surprised to see order books of such magnitude, and I'm always interested in seeing how these bonds end up trading once they hit the secondary markets. But there's no doubt that benchmark yields are so low that bond managers are reaching out to grab any yield where they see it."
The combination of low benchmark rates and investors' strong appetite for higher-yielding corporate debt has encouraged borrowers to tap debt capital markets at the strongest pace so far this year since 2009, according to Dealogic.
Some of the largest companies, including Microsoft, GE, Apple and Merck, raised funds through debt sales, pushing total bond offers to $262bn so far this year.
Investors' renewed push into the corporate bond market comes as yields on government debt reached record low levels in the US and turned negative in some countries in Europe ahead of additional stimulus measures announced by the European Central Bank.
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By buying US corporate bonds, investors can capture yields that are on average 128bp higher than those of US Treasuries with similar maturities. In Europe, the spread, or difference in yields, between corporate debt and government bonds is 77bp, according to Barclays indices.More corporate debt offers are on tap for the coming days, with ExxonMobil also beginning to market $7bn of securities in several maturities on Tuesday, its largest single bond offer.
Debt markets are bracing for other potential blockbuster offerings supporting a frenzy of M&A activity, such as Valeant's expected $9.6bn junk bond sale to finance its latest healthcare acquisition.
"It's certainly a lot of debt sales for markets to absorb," said Mr Kastner. "Actavis's offering will be a good test of broad investor appetite."
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