March 17 (Bloomberg) -- Pfizer Inc., the world’s biggest drugmaker, sold $13.5 billion of notes in a five-part issue to help finance its purchase of Wyeth in the largest non-financial offering since Roche Holding AG’s sale in February.

Pfizer sold its bonds at yields of 1.95 percentage points to 3.45 percentage points more than benchmarks, according to data compiled by Bloomberg. Roche paid yields of 2 percentage points to 3.65 percentage points over benchmarks last month for debentures of similar maturity.

Pharmaceutical companies are tapping the debt markets to finance mergers and acquisitions, taking advantage of investor appetite for alternatives to bonds from financial companies. Drugmakers have issued about $40.5 billion of bonds this year, compared with $13 billion in all of 2008, Bloomberg data show.

“The market still has faith in the pharmaceutical sector as a whole,” said Guy Lebas, chief economist at Janney Montgomery Scott LLC in Philadelphia. “The opportunities tend to be in the lower risk U.S.-dollar type issuers, and Pfizer of course fits the bill pretty well.”

Roche on Feb. 18 sold $16 billion of bonds to finance its takeover of Genentech Inc. in the second-largest corporate bond offering in a single day, Bloomberg data show.

France Telecom

France Telecom SA raised $16.4 billion in March 2001 in the largest corporate bond offering without a government guarantee, Bloomberg data show. The sale consisted of bonds denominated in dollars, euros and pounds.

Pfizer’s $1.25 billion of two-year, floating-rate notes pay 195 basis points more than the three-month London interbank offered rate, Bloomberg data show. Libor, a borrowing benchmark, is currently 1.3 percent.

The $3.5 billion of three-year, 4.45 percent notes priced to yield 305 basis points more than similar-maturity Treasuries; $3 billion of six-year, 5.35 percent notes pay a 340 basis-point spread; $3.25 billion of 10-year notes, 6.2 percent notes pay 325 basis points; and $2.5 billion of 30-year, 7.2 percent bonds pay 345 basis points, Bloomberg data show. A basis point is 0.01 percentage point.

Goldman Sachs Group Inc., JPMorgan Chase & Co., Bank of America Merrill Lynch, Citigroup Inc. and Barclays Plc managed the sale, Bloomberg data show.

‘On the Table’

Roche’s $4.5 billion of 10-year notes from its Feb. 18 sale climbed about 2.1 cents on the dollar since they were issued to 100.5 cents on the dollar as of yesterday, according to Bloomberg composite prices. That sale was the company’s first since 2003, Bloomberg data show.

For Roche, “it was a big deal versus the debt they had outstanding, so they needed to price it really attractively,” said Kevin Murphy, investment-grade team leader at Putnam Investments LLC in Boston. “At the same time, I think they’re somewhat criticized for leaving so much on the table.”

Roche’s 10-year, 6 percent notes priced at 98.43 cents on the dollar to yield 6.2 percent, or 345 basis-points more than comparable-maturity Treasuries, Bloomberg data show.

“Here’s Pfizer, it’s a slightly better known name,” Murphy said. “I’m not surprised they’re trying to come a little tighter. Nor am I surprised it’s doing quite well.”

Merck, Roche

Pfizer said Jan. 26 that it would buy Wyeth for $64.2 billion. Six weeks later, Merck & Co. of Whitehouse Station, New Jersey, said it would purchase Kenilworth, New Jersey-based Schering Plough Corp. for $41.1 billion. The same week, Swiss drugmaker Roche won an eight-month effort to acquire Genentech Inc. of South San Francisco, California, for $46.8 billion.

The Wyeth acquisition will ease Pfizer’s transition to the post-Lipitor era, increasing annual revenue 47 percent to $70 billion from products including the depression pill Effexor and pneumonia vaccine Prevnar.

“One of the big issues with Pfizer is the patent cliff with Lipitor in 2011,” Stuart Hosansky, a principal in Malvern, Pennsylvania, at Vanguard Group, which has $488 billion in fixed- income assets under management, said in a telephone interview yesterday. “They needed to replace the revenue they have been getting from that and the Wyeth deal does a fair job of it.”

Standard & Poor’s ranked the proposed Pfizer securities AAA, according to a statement released yesterday by the New York-based ratings company. The ranking will likely be lowered to AA, two levels lower, after the acquisition of Wyeth, S&P said.

“The additional borrowings needed to fund the acquisition weaken credit measures from the essentially unleveraged position of the past few years,” S&P analyst David Lugg in New York said in the statement.

While adding Madison, New Jersey-based Wyeth’s products to Pfizer’s portfolio “would improve the company’s overall diversification,” it “would only modestly reduce the proportion of revenues exposed to generic competition through 2011,” S&P said.

Pfizer previously issued dollar-denominated bonds, excluding convertible notes and debt maturing in less than 18 months, in January 2004, selling $750 million of 4.5 percent notes, Bloomberg data show. The notes priced to yield 44 basis points more than comparable-maturity Treasuries.

To contact the reporter on this story: John Detrixhe in New York at jdetrixhe1@bloomberg.net

Last Updated: March 17, 2009 16:54 EDT