Bond sales worldwide are reviving from the slowest month of theyear as yields on corporate debt decline to the least since2010.

GlaxoSmithKline Plc's $5 billion offering, its firstdollar-denominated sale in more than four years, led issuance of atleast $55.1 billion this week following $45.8 billion in the periodended April 27, according to data compiled by Bloomberg.Stockholm-based Ericsson AB, the biggest maker of mobile phonenetworks, sold $1 billion of 10-year bonds to refinance existingdebt, its first issue in almost three years.

Borrowing costs are declining as investor demand rises amidoptimism that the global economy isn't slowing enough to dentcorporate creditworthiness. Some 71 percent of U.S. companies thathave reported first-quarter earnings beat analysts' estimates, datacompiled by Bloomberg show. Mutual fund inflows for fixed-incomefunds globally rose last week to the highest level since March,according to research firm EPFR Global.

“What else can they buy that offers a comparable risk-rewardprofile?” said Edward Marrinan, macro credit strategist at RoyalBank of Scotland Plc in Stamford, Connecticut. “While manyportfolio managers are hardly thrilled with current all-in yields,corporate credit fundamentals are good and default risk ishistorically low. As long as this remains the case, demand forcredit exposure will be strong.”

Yields on company bonds from the most creditworthy to theriskiest declined to 4.092 percent, the lowest level since Nov. 9,2010, and down from 4.825 percent at year-end, according to theBank of America Merrill Lynch Global Broad Market Corporate &High Yield Index.

The extra yield investors demand to own the debt rather thangovernment securities has declined to 277 basis points from lastmonth's high of 285 basis points, index data show. While spreadsare down, they're still above last year's low of 193 on April 11,2011.

Elsewhere in credit markets, a benchmark gauge of U.S. companycredit risk rose the most in three weeks, with the Markit CDX NorthAmerica Investment Grade Index, which investors use to hedgeagainst losses or to speculate on creditworthiness, climbing by 3.4basis points to a mid-price of 99.5 basis points as of 12:04 p.m.in New York, according to prices compiled by Bloomberg.

That's the biggest rise since April 13 for the index, whichtypically rises as investor confidence deteriorates and falls as itimproves. Credit-default swaps pay the buyer face value if aborrower fails to meet its obligations, less the value of thedefaulted debt. A basis point equals $1,000 annually on a contractprotecting $10 million of debt.

Rate Swap Spreads

The U.S. two-year interest-rate swap spread, a measure of bondmarket stress, rose for a third day, climbing 0.9 basis points to29.25 basis points as of 12:03 p.m. in New York. The gauge widenswhen investors seek the perceived safety of government securitiesand narrows when they favor assets such as corporate bonds.

Bonds of ABB Ltd. are the most actively traded U.S. corporatesecurities by dealers today, with 125 trades of $1 million or moreas of 12:05 p.m. in New York, according to Trace, the bond-pricereporting system of the Financial Industry Regulatory Authority.ABB Finance USA sold $2.5 billion of debt yesterday in a three-partoffering.

Corporate bond sales are reviving with $45.1 billion of sales inthe first three days of May, compared with $34.9 billion a monthearlier, Bloomberg data show. Sales in April of $200 billion, lessthan half the $409 billion sold in March, marked the slowest monthsince December, when issuance declined to $187.3 billion.

While austerity measures aimed at stemming Europe's debt crisishave pushed economies from the U.K. to Spain into recession,European Central Bank President Mario Draghi said policy makersstill expect a gradual recovery this year.

In the U.S., unemployment fell to a three-year low of 8.1percent in April, Labor Department figures showed today inWashington. Of the 418 S&P 500 index companies that havereported first-quarter earnings, 295 have beaten analysts' earningsestimates, Bloomberg data show.

“A lot of the weakness was due to the fact that you had anescalating situation in the European debt crisis,” Hans Mikkelsen,a high-grade credit strategist at Bank of America Merrill Lynch,said in a telephone interview. “At the same time you hadsignificant signs of weakness in U.S. economic data. That has sortof stabilized.”

Glaxo Offering

Investors added $4.85 billion to fixed-income mutual fundsglobally in the week-long period ended April 25, the highest levelsince the period ended March 14 and more than double the 2012 lowof $2 billion posted April 11, according to EPFR data.

GlaxoSmithKline's sale on May 2, the busiest day in the U.S.corporate bond market in seven weeks, was split between $1 billionof three-year notes and $2 billion each of five- and 10-year debt,Bloomberg data show.

The bonds traded yesterday at tighter spreads relative toTreasuries, with the 2015 maturity yielding 38.1 basis points morethan benchmarks after pricing at 45 basis points, data fromBloomberg and Trace show.

“Issuers that are ready to go are taking advantage of bettermarket conditions ahead of Friday's payroll number,” said AnneDaley, a New York-based managing director on the investment-gradesyndicate desk at Barclays Plc, which helped to manage the Glaxodeal. “The large, multi-tranche, multi-billion-dollar deals aregoing exceptionally well.”

Ericsson's $1 billion of 10-year, 4.125 percent notes, whichpriced to yield 225 basis points more than Treasuries on May 2,tightened yesterday to 210.4 basis points, Bloomberg and Trace datashow.

Corporate bonds “still stand out head and shoulders among themore defensive, risk-free asset classes,” Thomas Chow, a moneymanager at Delaware Investments in Philadelphia with about $170billion under management, said in a telephone interview. “There hasjust been such deep demand among institutional investors.”

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