Sales of U.S. corporate bonds rose for the second straight week,the first back-to-back gain in three months, as borrowers tookadvantage of tightening relative yields.

AT&T Inc., the largest U.S. phone company, and Louisville,Colorado-based Zayo Group LLC led borrowers issuing $17.4 billion,a 6 percent increase from the five days ended June 8, according todata compiled by Bloomberg. The extra yield investors demand tohold corporate debt rather than Treasuries with similar maturitiesnarrowed 3 basis points this week through yesterday to 315 basispoints, or 3.15 percentage points, according to Bank of AmericaMerrill Lynch's U.S. Corporate & High Yield Master index.

Symantec Corp. joined AT&T as sales reached $6.9 billion onJune 11, the busiest start to a week in more than two months. Whileissuers rushed to the market on growing optimism that financialcontagion can be contained following Spain's request for a 100billion euro ($126 billion) bank bailout, the pace slowed inadvance of elections on June 17 in Greece that may determine thefuture of the euro zone.

“Issuers are being very opportunistic,” said James Kochan, chieffixed-income strategist in Menomonee Falls, Wisconsin, at WellsFargo Fund Management LLC. That means “coming to market as quicklyas they can” in strong conditions and holding off if theenvironment becomes less favorable, he said.

Offerings last rose for two straight weeks in the period endedMarch 9, when sales soared to a record $60.1 billion, Bloombergdata show.

Italy's borrowing costs surged yesterday at its first bondauction since Spain's bank rescue request, putting more pressure onEuropean leaders to step up their response to the debt crisis. TheTreasury sold 4.5 billion euros of debt, including 3 billion eurosof its three-year benchmark bond to yield 5.3 percent, the highestyield since December.

In Greece, the vote will turn on whether residents, in a fifthyear of recession, accept open-ended austerity to stay in the euroor reject the conditions of a bailout and risk the turmoil ofbecoming the first to exit the 17-member currency. World leadershave said they'd prefer a pro-euro result, underscoring concernthat the region's crisis will infect markets globally.

“We've just been rotating among these European names,” ThomasChow, a money manager at Delaware Investments in Philadelphia withabout $170 billion under management, said in a telephone interview.“We're really substituting Ireland for Greece, Greece for Portugal,Portugal for Spain. And the next name on the block is Italy.”

Investment Grade

Investment-grade sales fell this week, with borrowers issuing$15.7 billion of notes, after $16 billion in the previous week,Bloomberg data show.

Spreads fell 1 basis point this week to 225 basis points throughyesterday, according to the Bank of America Merrill Lynch U.S.Corporate Master index. A basis point is 0.01 percentage point.Yields dropped to 3.44 percent from 3.46 percent on June 8.

Dallas-based AT&T issued $1.15 billion of 1.7 percent,five-year bonds to yield 105 basis points more than Treasuries and$850 million of 3 percent, 10-year debt, a reopening, with a 135basis-point spread, Bloomberg data show.

The notes due June 2017 rose 0.1 cent from the issue price to99.92 cents on the dollar as of yesterday to yield 1.72 percent,according to Trace, the bond-price reporting system of theFinancial Industry Regulatory Authority.

Symantec, the world's biggest seller of security software,offered $600 million of 2.75 percent, five-year notes at a relativeyield of 210 basis points and $400 million of 3.95 percent, 10-yearbonds at 245 basis points, Bloomberg data show.

Issuance by speculative-grade borrowers recovered, with sales of$1.7 billion boosted by Zayo's $1.25 billion offering, Bloombergdata show. Sales compare with $392 million last week.

The sale yesterday from the Internet connectivity provider wasthe largest in a month for a high-yield issuer, with proceeds to beused for its acquisition of AboveNet Inc.

Zayo sold $750 million of 8.125 percent senior secured notes dueJanuary 2020 to yield 698 basis points more than similar-maturityTreasuries and $500 million of 10.125 percent senior debt due July2020 at a spread of 883 basis points, Bloomberg data show.

Spreads on speculative-grade bonds declined 10 basis points thisweek to 685 basis points, according to the Bank of America MerrillLynch U.S. High Yield Master II index. Yields fell to 8.08 percentfrom 8.16 percent on June 8.

Issuers in the pipeline include Engility Corp. and PF Chang'sChina Bistro Inc., which is selling $300 million of debt to helpfinance its acquisition by Centerbridge Partners LP, Bloomberg datashow.

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