The world's largest drugmaker Pfizer sold $13.5 billion in debt on Tuesday, to help fund its purchase of Wyeth. The debt was sold in five tranches, maturing from 2012 until 2039 and is reported to have raised $27 billion in interest, buy-side sources said, with about 1,700 orders placed, one trader said.

In January, Pfizer announced its plans to purchase Wyeth for $68 billion. The merger, which would greatly expand Pfizer's revenue and array of medicines, is expected to close by the end of the third quarter.  (See: Pfizer-Wyeth create $68-billion blockbuster deal)

Pfizer had lined up $22.5 billion in bank financing to support the acquisition, and analysts had expected the company to refinance part of those loans with bonds.

Pfizer's debt sale consist of $1.25 billion two-year floating rate notes priced at 195 basis points over the three-month London international bank offered rate.

It also included $3.5 billion three-year fixed-rate notes yielding 305 basis points more than comparable US Treasuries, $3 billion six-year notes yielding 340 basis points over Treasuries, $3.25 billion 10-year notes yielding 325 basis points over Treasuries and $2.5 billion 30-year bonds yielding 345 basis points over Treasuries.

If the size of Pfizer's bond sale remains where it was launched, it will be the second-largest US dollar-denominated corporate bond ever priced, behind Roche's Holding's $16 billion deal sold last month.had sold those bonds to finance its acquisition of Genentech (See: Roche clinches Genentech deal for $47 billion). Some investors believe the success of Roche's deal paved the way for Pfizer to sell such a large bond offering.

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 offered about $40.5 billion of bonds this year, compared with $13 billion in all of 2008.

Even in tough credit markets, the pharma industry is in the midst of a variety of deals; Merck' $41.1 billion purchase of Schering Plough and Roche's $46.8 billion deal for Genentech show that the industry is vibrant, analsysts said.

Pfizer's offering was attractive to investors clamoring for investment-grade bonds from companies with little debt and those that can best weather economic downturns.

Standard & Poor's Ratings Services said on Monday that it assigned its 'AAA' rating to Pfizer's senior unsecured notes. However, these notes, and all other long-term ratings on Pfizer, remain on CreditWatch where they were placed with negative implications on January 26, 2009.

"Financially, the additional borrowings needed to fund the acquisition weaken credit measures from the essentially unleveraged position of the past few years. In our view, Pfizer may need to take other actions to mitigate the expected revenue and earnings losses,'' S&P said.

Fitch Ratings has assigned an 'AA' rating to Pfizer's $13.5 billion notes.

Pfizer's profit fell slightly in 2008, on flat revenue, hurt by the pharma giant's continuing failure to launch big-selling medicines needed to replace drugs whose sales have plunged due to competition from cheaper generics.

Pfizer's biggest challenge comes in 2011, when its $12 billion-a-year Lipitor cholesterol fighter loses US patent protection and confronts cheaper generic competition. Lipitor is the world's biggest-selling drug.

Pfizer's stock closed on Tuesday at $14.26, up 0.78 per cent, or 0.11 from its previous day close of 14.15 on the NYSE. The company has a market capitalisation of $96.18 billion as on 17 March 2009.

Bank of America, Barclays, Citigroup, Goldman Sachs, and J.P. Morgan were the joint lead managers for the sale, while Credit Suisse, Deutsche Bank, HSBC, RBS Greenwich Capital, Mitsubishi, UBS, and Santander were the passive bookrunners.