UPDATE:Abbott, Chevron Among High-Grade Cos Issuing New Bonds

Abbott Laboratories (ABT) and Chevron Corp. (CVX) are among U.S. investment-grade companies marketing new bonds Thursday as they take advantage of investor appetite to fund their operations.

Abbott launched $3 billion of bonds maturing in 10 and 30 years. The health-care company said it would use the proceeds to repay about $1 billion in commercial paper and for other corporate purposes.

The $2 billion 10-year piece was launched at a risk premium, or spread, of 220 basis points over Treasurys, and the $1 billion 30-year issue was launched at a spread of 235 basis points over Treasurys.

An existing 10-year note from Abbott due 2017 is trading at a spread of 202 basis points over Treasurys, according to MarketAxess.

Chevron is marketing three, five- and 10-year noncallable bonds in part to refinance a portion of the company's existing commercial paper borrowings and other Chevron debt. The deal is expected to total $5 billion.

These companies don't issue bonds as often as others, and so are of particular interest to investors looking to diversify their holdings.

"New or less frequent high-quality issuers have generally been met with strong demand as investors seek to add new issuers to their portfolios," said Jon Duensing, principal at Smith Breeden Associates.

He expects issuance from high-quality issuers to continue given large refinancing needs, and that it will see good reception from investors.

"The companies that have accessed the market have been predominately stronger, better-capitalized businesses, with the wherewithal to handle an economic downturn," said Tim Compan, corporate bond portfolio manager at Cleveland-based Allegiant Asset Management. "There has, and will be indigestion as spreads tighten, but for the most part, new issues have been well-received."

February already ranks as the ninth-largest on record in issuance of U.S. dollar-denominated high-grade debt, according to data provider Dealogic. The month's tally stands at $67 billion and for this week alone, $9 billion, in bonds not backed by the Federal Deposit Insurance Corp.

Energy and utility companies made up a majority of bonds sold this week, and more are on tap. Oneok Inc. (OKE), Alabama Power, Williams Cos. (WMB), Nevada Power and Arizona Public are also offering smaller deals. Investors consider such companies as faring better than others, such as retailers, in the weakening economy.

Noble Energy Inc. (NBL) sold $1 billion of 10-year bonds that offered a risk premium of 550 basis points over Treasurys on Tuesday. The spread has since decreased to 500 basis points, indicating investor demand.

The corporate supply Thursday comes amid a glut of other debt. Fannie Mae (FNM) sold a record $15 billion in two-year notes, which went on to trade well in the so-called secondary market. Meanwhile, there will be an auction of seven-year Treasury notes Thursday afternoon.

-By Romy Varghese, Dow Jones Newswires; 215-656-8263; [e-mail]

(Kate Haywood contributed to this report.)