Companies borrowing to complete deals and prop up their stock prices are helping to keep U.S. investment-grade debt sales at about a record pace, defying predictions of a slowdown.

Apple Inc. and Leuven, Belgium-based Anheuser-Busch InBev NV have led $476.6 billion of offerings this year, almost matching the $477.4 billion sold during the same period in 2013, an unprecedented year for U.S. issuance, according to data compiled by Bloomberg. Apple's $12 billion deal to fund shareholder rewards and AB InBev's $5.25 billion sale in January to finance its purchase of South Korea's Oriental Brewery Co. are spurring the second-busiest period ever for debt sales used to fund mergers, acquisitions, dividends and share buybacks.

Companies are taking advantage of an unexpected reprieve from rising borrowing costs after a first-quarter economic slowdown and tepid inflation boosted demand for fixed-income assets. While analysts ended 2013 predicting high-grade sales would lose steam this year amid rising interest rates, borrowing benchmarks have instead declined to an 11-month low.

“What really surprised us at the beginning of the year was the decline in interest rates,” Hans Mikkelsen, head of U.S. investment-grade credit strategy at Bank of America in New York, said in a telephone interview. “Issuers have a window of opportunity to issue at very attractive yields that they didn't expect.”

Borrowing costs fell beginning in January as a rout in emerging markets and weakness in the U.S. and China prompted investors to seek the safety of government debt, upending predictions for 10-year Treasury yields to reach as high as 3 percent by the end of the first quarter, according to a Bloomberg survey of economists. Yields instead fell 31 basis points to 2.72 percent during the period before reaching 2.62 percent yesterday.

Yields on dollar-denominated, investment grade bonds reached 3.05 percent yesterday, the lowest since last June and within 41 basis points of their all-time low, according to the Bank of America Merrill Lynch U.S. Corporate Index.

“These are all levels that could prompt some new issuance into the market,” Kevin Flanagan, the chief fixed-income strategist at Morgan Stanley Smith Barney in Purchase, New York, said in a telephone interview. “I don't think you would want to sit here and wait and think” that yields will fall below 2.5 percent, he said.

Apple's Return

The drop in borrowing costs spurred $112.3 billion of high-grade bond sales last month, the third-busiest April on record, led by Apple's return to the market after its $17 billion offering a year earlier, Bloomberg data show.

A total of 15 companies have sold $38.3 billion of high-grade bonds in the U.S. this year to help fund mergers and acquisitions, leveraged buyouts, share buybacks or dividend payments, Bloomberg data show. That's the most for the period after $46.3 billion in the similar timeframe last year.

Bank of America last year projected a 16 percent drop in investment-grade sales for 2014, while Barclays Plc forecast a decline of 8 percent for fixed-rate debt.

Predictions for a slowdown could still prove correct as the economy recovers from the first-quarter slowdown and borrowing benchmarks begins to reverse, Mikkelsen said.

The economy is “bouncing back,” he said, citing last week's jobs report showing employers boosted payrolls by the most in two years and retail sales that posted the biggest gains since September 2012. “You can kind of see a rapid normalization of interest rates in the coming weeks,” he said. “We are getting to the inflection point.”

Sales have dipped during the second half of the year in eight of the past nine years, with offerings in 2013 dropping 10 percent to $543 billion from $604 billion in the first six months, Bloomberg data show.

Apple, the Cupertino, California-based iPhone maker, is using proceeds to fund a $30 billion increase to a shareholder reward program that buys back shares and makes dividend payments, according to a company filing. Apple, which raised the debt as a cheaper alternative to the taxes it would face by repatriating offshore cash, boosted the program for the second time in 12 months.

Cisco Systems Inc. raised $8 billion in February to help finance stock buybacks, while Rogers Communications Inc. sold $750 million in the U.S. in March to buy spectrum, Bloomberg data show.

AB InBev's sale included $850 million of 4.625 percent, 30-year bonds at a relative yield of 90 basis points, Bloomberg data show.

“If you see how the cost of funds has decreased this year and M&A activity has increased, I think there is still a lot of supply to come,” Dorian Garay, a New York-based money manager for an investment-grade debt fund at ING Investment Management, said in a telephone interview.

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