United Technologies Corp. plans to raise $9.8 billion in the largest U.S. corporate bond sale in more than three years to help finance its $16.5 billion acquisition of Goodrich Corp.

The maker of Sikorsky helicopters and Pratt & Whitney engines, which last tapped the market more than two years ago, is selling debt in six portions ranging from 18-month floating- rate notes to 30-year bonds, the Hartford, Connecticut-based company said today in a regulatory filing.

United Technologies, with investment-grade ratings from Moody's Investors Service and Standard & Poor's, is seeking to lure bond buyers as turmoil in Europe sends them to safer assets. While speculative-grade bonds in the U.S. have declined 1.3 percent this month, investment grade is unchanged, according to Bank of America Merrill Lynch index data.

“People are holding their breath” over rising speculation that Greece will leave Europe's common currency, setting off a financial contagion, Mark Pibl, head of credit strategy at broker-dealer Cortview Capital Securities LLC, said in a telephone interview. “That's partially why people are jumping in here.”

Proceeds from the sale will be used to help fund the aerospace and building-system company's acquisition of Charlotte, North Carolina-based Goodrich, which is expected to close by mid-year, and for general corporate purposes, United Technologies said in the filing.

Elections in Greece

The company plans to sell floating-rate debt in two portions, including $1 billion of 18-month notes that may yield 27 basis points more than the London interbank offered rate and $500 million of three-year notes at 50 basis points more than Libor, a borrowing benchmark, according to a person with knowledge of the transaction.

United Technologies also is set to sell $1 billion of three-year notes that yield 80 basis points more than similar-maturity Treasuries; $1.5 billion of five-year debt at a spread of 105 basis points; $2.3 billion of 10-year securities at 135 basis points; and $3.5 billion of 30-year bonds at 173 basis points, said the person, who asked not to be identified because terms aren't set. A basis point is 0.01 percentage point.

European leaders are tying their next steps on the financial crisis to the outcome of a bitterly contested election in Greece that may determine whether the 17-nation euro currency splinters. A six-hour summit ended early today with an exhortation to Greek voters to elect a pro-austerity government on June 17 that makes the budget cuts needed to keep the financially ravaged country in the euro.

While relative yields on U.S. investment-grade bonds have climbed 36 basis points from this year's low on March 20 to 225 basis points, they're below last year's high of 272 on Oct. 5, Bank of America Merrill Lynch index data show.

United Technologies' $1.25 billion of 4.5 percent notes due April 2020 fell 1.17 cents to 113.4 cents on the dollar to yield 2.6 percent as of 11:44 a.m. in New York, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The bonds have climbed from 111.9 cents on Sept. 20, the day before the Goodrich deal was announced.

The United Technologies sale will be the largest in dollars since March 2009, when Pfizer Inc. sold $13.5 billion of bonds in a five-part offering, according to data compiled by Bloomberg.

In its last sale in February 2010, United Technologies sold $2.25 billion of debt split between 10- and 30-year maturities, Bloomberg data show.

The offering of the bonds, which may be rated A2 by Moody's and A by S&P, both the sixth level of investment grade, is being managed by Bank of America Corp., HSBC Holdings Plc and JPMorgan Chase & Co., the person said.

Bloomberg News

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United Technologies' Big Bond Deal

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