Companies Embrace Low Interest Rates by Selling Bonds to Raise Billions Verizon Communications shattered records and shook up the bond world on Wednesday when it sold $49 billion of investment-grade corporate debt at one time. It was the largest deal of its kind, exceeding Apple's $17 billion bond sale in April and illustrating the degree to which low interest rates are enabling corporations to borrow money inexpensively. Verizon undertook the huge sale of corporate debt as it moves to finance its $130 billion deal to buy out Vodafone's 45 percent stake in their Verizon Wireless joint venture. The ease with which Verizon raised so much money caught even longtime market participants by surprise and fed speculation that more companies might tap the debt markets before interest rates begin to rise, as is expected. "We're starting to see the animal spirits pick up again," said Kathy Jones, a fixed-income strategist at Charles Schwab. Usually, once it gets going, it doesn't let up. One banker involved in the offering said he was counseling corporate clients that now was an ideal time to raise more money for acquisitions. "From an M.& A. perspective, nothing is out of reach," he said. He spoke anonymously because he did not want to damage his relationship with his clients. Verizon's buyout of the Vodafone stake in the wireless business - the third-largest corporate acquisition after Vodafone's $203 billion takeover of the German cellphone operator Mannesmann in 2000, and the $182 billion merger of AOL and Time Warner in 2001 - was in the works for years, but it was finally struck last week, in part because Verizon wanted to take advantage of low interest rates while they lasted. "Timing is everything," said Donna Hitscherich, a finance professor at the Columbia Business School. "There are deals happening now that we were talking about in the "90s. The catalytic event here was willingness and available financing. While the stunning scale of the Verizon debt sale may inspire hopes of more activity on Wall Street, there are several reasons the offering on Wednesday could turn out to be an outlier, rather than the start of another wave of deals. Cheap financing has been available for years, and it has not yet spurred a boom in mergers and acquisitions, as many companies remain hesitant to do risky deals that may not pay off. "If you do the deal only because it's cheap, it's like shopping on sale," Ms. Hitscherich said. You go and buy the thing and you never wear it. Rather, for those companies that are considering a big deal, there is incentive to complete it as soon as possible to take advantage of historically low interest rates. In the last few months, as interest rates have crept up, deal-makers have watched the markets closely for signs that financing might grow more difficult. And while rates have not yet spiked, the small increases have already made an impact. People involved with the sale this year of H. J. Heinz to 3G Capital and Warren E. Buffett's Berkshire Hathaway say that deal might not have been made today. The premium paid for the company was already so high that even slightly higher financing costs might have put a deal out of reach. Appetite for the Verizon bonds greatly exceeded expectations largely because they offered generous returns compared with similar corporate bonds and government notes. The debt offering, which was marketed by banks led by Barclays, Bank of America, JPMorgan Chase and Morgan Stanley, included 10-year bonds that yield 5.2 percent, and 30-year bonds yielding 6.55 percent. That is better than the average BBB-rated industrial bond, now averaging a yield of 4.16 percent, or BBB bonds from telecommunications companies, now averaging 4.34 percent. Verizon offered the premiums to sell as much debt as possible in a short amount of time, betting that investors would be enticed to buy a record amount of corporate debt. The company initially signaled that it might sell $20 billion in dollar-denominated bonds and make further bond sales in euros and British pounds. But as orders came in on Tuesday, it was clear that demand would permit Verizon to issue all its bonds in dollar denominations. By Wednesday, more than $100 billion of orders had come in, and the company was able to complete the offering that afternoon. Another factor helping Verizon was the feeling that the wireless industry was a stable business, making any risks that the company might falter negligible. For institutional investors, Verizon's offering represents a welcome opportunity to lock in decent returns from a stable corporate issuer. "Investors continue to sit on a lot of cash," said Kevin Giddis, head of fixed-income sales, trading and research at Raymond James. Mr. Giddis noted that with the equity and currency markets still shaky, locking in such rates was appealing. "As investors look around with all the cash they have, 5 percent in recent memory doesn't look that bad," he said. Verizon and Vodafone talked about unwinding their joint venture for years, but negotiations accelerated in recent months. Verizon's chief executive, Lowell C. McAdam, noted last week that it made sense to strike the deal now, before the Federal Reserve begins to scale back its stimulus program, causing interest rates to rise. That pullback is expected to start after the Fed's meeting next week. "The capital markets environment is favorable," Mr. McAdam said. Verizon took out a $61 billion bridge loan to buy out Vodafone's stake. Selling bonds will allow the company to repay quickly the largest portion of that, a $49 billion capital markets bridge. "Before today, no capital markets person could have said with credibility that you were going to go out and raise $49 billion in one try," said one banker involved in the deal. It's stunning, unprecedented. Global Corporate Investment Grade Bonds: All Time Largest Deals