Nov. 6 (Bloomberg) -- International Business Machines Corp., the world’s largest computer-services company, and liquor maker Diageo Plc led $13.7 billion of investment-grade bond offerings this week, the slowest period in two months.

Sales fell 15 percent from last week, according to data compiled by Bloomberg. Armonk, New York-based IBM sold $2 billion of senior unsecured securities. Diageo, the producer of Guinness and Johnnie Walker, sold $500 million of notes. Both returned to the credit market a year after they last sold debt during the worst financial crisis since the 1930s.

U.S. borrowers tapped debt markets at a record pace this year, issuing more than $1 trillion of bonds, Bloomberg data show. Companies that took advantage of open credit markets after being locked out during the credit seizure last year have bolstered cash balances and set aside funds to repay bonds maturing in the next year, according to Rizwan Hussain, U.S. credit strategist in New York at Morgan Stanley.

“Issuers keep telling us they really just don’t need the money right now,” Hussain said yesterday in an interview. “Balance sheets are quite liquid, mergers and acquisitions deals are getting announced, but they generally won’t close until next year, and we are still seeing stock as a big portion of currency for these transactions, not cash or new debt.”

Companies have borrowed at least $1.1 trillion in bonds this year, compared with $722 billion in the corresponding period of 2008 and $1.04 trillion in 2007, the biggest year for bond sales. For all of 2007, $1.17 trillion of debt was sold.

Sales Decline

Borrowers sold at least $16.8 billion of debt this week, a 27 percent decline from the previous week, Bloomberg data show.

Yields on investment-grade bonds were unchanged relative to U.S. Treasuries this week at 218 basis points as of yesterday, according to Merrill Lynch & Co.’s U.S. Corporate Master index. A basis point is 0.01 percentage point.

Yields rose 7 basis points to 4.92 percent, the first weekly rise since Oct. 9, according to the Merrill Lynch data.

The Federal Reserve reiterated Nov. 4 that interest rates will stay unchanged in a range of zero to 0.25 percent for an “extended period” as long as unemployment fails to decline.

The unemployment rate in the U.S. soared to a 26-year high of 10.2 percent in October and employers cut more jobs than forecast, underscoring why Fed policy makers say interest rates will remain low until the labor market recovers. Payrolls fell by 190,000 workers, more than the 175,000 predicted in a Bloomberg News survey of economists.

IBM’s Low Rate

IBM’s sale included $1.25 billion of 3.5-year notes that pay a 2.1 percent coupon, the lowest fixed-rate coupon it’s paid on a benchmark-size dollar deal since at least 1984, and $750 million of 2-year floating-rate notes yielding 4 basis points more than the three-month London interbank offered rate, Bloomberg data show. The fixed-rate debt priced to yield 70 basis points more than similar-maturity Treasuries.

The company last sold dollar-denominated debt in October 2008 when it raised $4 billion, the company’s biggest offering. The yields over benchmark rates that IBM paid were the highest on record for the company.

“If you look at where IBM came, versus where it last accessed the market, in terms of levels, I think you’ll find it, from their perspective, extremely attractive funding,” said Paul Spivack, global head of investment-grade syndicate at Morgan Stanley in New York.

Doug Shelton, an IBM spokesman, didn’t respond to a request for comment.

Diageo Issue

London-based Diageo sold $500 million of 3.25 percent, five-year notes through its Diageo Finance BV unit. The securities priced to yield 3.34 percent, or 97 basis points more than Treasuries.

Diageo also last issued debt in October 2008, selling $1 billion of five-year notes. The 7.375 percent notes priced to yield 435 basis points more than benchmarks, Bloomberg data show.

High-yield, high-risk bond sales fell to $3.07 billion, the lowest in four weeks, and a 49 percent decline from last week.

Junk-bond spreads narrowed 4 basis points this week relative to Treasuries to 756 basis points as of yesterday, Merrill data show. Yields on speculative-grade bonds were unchanged at 10.02 percentage points relative to benchmarks, Merrill data show.

Netflix Inc., the largest U.S. mail-order movie-rental service, sold $200 million of senior unsecured notes that priced to yield 8.5 percent, or 528 basis points more than similar- maturity Treasuries, Bloomberg data show.

High-yield, high-risk, or junk, bonds are rated below Baa3 by Moody’s Investors Service and BBB- by S&P.

Among companies seeking to issue debt is Belo Corp. The television broadcaster that spun off its newspapers last year plans to sell $275 million of debt.

To contact the reporters on this story: Nikolaj Gammeltoft in New York at ngammeltoft@bloomberg.net; Gabrielle Coppola in New York at gcoppola@bloomberg.net

Last Updated: November 6, 2009 09:38 EST