May 26 (Bloomberg) -- Pfizer Inc., the world’s largest drugmaker, will raise $10.6 billion from its first sale of bonds in euros since 2007 and from a debut issue in U.K. pounds.

Pfizer is selling 1.85 billion euros ($2.6 billion) of four-year bonds, 2 billion euros of seven-year notes, and 2 billion euros of 12-year debt, according to a banker involved with the deal, who declined to be identified before the sale is completed. The New York-based firm is also issuing 1.5 billion pounds ($2.4 billion) of debt due in 2038, the banker said.

Pharmaceutical companies are tapping the debt markets to finance mergers and acquisitions, taking advantage of investor appetite for investment-grade corporate bonds. Drugmakers and healthcare service providers have offered $20 billion of bonds in euros and pounds this year, compared with an equivalent $1.2 billion in all of 2008, according to data compiled by Bloomberg.

“It’s a big success for Pfizer, especially in today’s market with so many companies selling bonds,” said Ivan Comerma, head of treasury and capital markets at Banc Internacional-Banca Mora in Andorra, who plans to buy some of the notes.

Wyeth Takeover

Pfizer said in January that it would buy rival Wyeth of Madison, New Jersey in a deal valued at about $62 billion. Roche Holding AG, the Basel, Switzerland-based drugmaker, in February raised about $40 billion in bond sales worldwide, including $14.3 billion denominated in euros and pounds, to help fund its takeover of San Francisco-based Genentech Inc.

“We expect to use the net offering proceeds for general corporate purposes, including funding a portion of the purchase price of the proposed Wyeth acquisition and the refinancing of existing debt,” said Pfizer spokeswoman Joan Campion.

The New York drugmaker is paying lower interest rates on its debt than Roche agreed on its notes in February.

Pfizer’s four-year bonds in euros will be priced to yield 120 basis points more than the benchmark mid-swap rate, the banker said. That compares with a spread of 225 basis points on Roche’s 5.25 billion euros of four-year notes.

Pfizer’s seven-year bonds will yield 155 basis points over the swap rate, and its 12-year notes will have a spread of 195 basis points, the banker said. The 29-year bonds in pounds will yield of 195 basis points over U.K. government debt.

Tighter Spreads

Yields on investment-grade company bonds in euros rose 5 basis points yesterday to 287 basis points more than the mid- swap rate, according to Merrill Lynch & Co.’s Euro Corporate bond index. The yield gap has tightened from a record 359 basis points March 20.

Bank of America Corp., Barclays Capital, Citigroup Inc., Goldman Sachs Group Inc. and JPMorgan Chase & Co. are the active lead managers for the transaction.

Credit Suisse Group AG, Deutsche Bank AG, HSBC Holdings Plc, Mitsubishi UFJ, Royal Bank of Scotland Group Plc, Banco Santander SA and UBS AG are also helping to sell the deal, the banker said.

Moody’s Investors Service rates the drugmaker at Aa2, its third-highest investment-grade ranking, and Standard & Poor’s at two steps higher at AAA.

To contact the reporter on this story: Esteban Duarte in Madrid at eduarterubia@bloomberg.net

Last Updated: May 26, 2009 12:00 EDT