2nd UPDATE: High-Grade Bond Sales Reach $12 Billion For Second Day

Companies sold $12 billion in investment-grade bonds Tuesday for the second day in a row, taking advantage of renewed investor confidence to raise money to acquire rivals, refinance debts or repay a government bailout.

Demand was so robust Monday that some companies were able to borrow more than they had planned or pay less than anticipated. The appetite for new bonds illustrates how pension funds, insurance companies and other investors are eager for highly rated bonds yielding more than government securities.

"All in yields are extremely low, spreads are relatively attractive and almost everyone expects rates to move higher eventually," said Tom Murphy, portfolio manager at RiverSource Investments in Minneapolis. "With corporate America seemingly more sanguine about their business prospects, why not borrow to invest for growth?"

New bond sales had slowed recently amid concerns over Greece's fiscal position, which raised doubts about bonds in general. But the European Union's steps to address that situation and reports of economic recovery in the U.S. have revived investors' confidence.

"There is a cautious perception that sovereign risk has been somewhat reduced and this gives investors a chance to return to the market," said Scott MacDonald, director of research at Aladdin Capital Holdings in Stamford, Conn.

The largest deal Tuesday came from Swiss pharmaceutical giant Novartis AG (NVS), which increased its three-part offering to $5 billion from $4 billion. Proceeds will finance its acquisition of a 52% stake in eye-care products maker Alcon from Nestle SA (NSRGY, NESN.VX), according to the prospectus.

Other deals include Royal Bank of Scotland Group PLC's (RBS, RBS.LN) $2 billion note, Amgen Inc.'s (AMGN) $1 billion bonds, American Honda Finance's $1 billion issue, and Anadarko Petroleum Corp.'s (APC) $750 million 30-year.

Real estate investment trust ProLogis (PLD) was also marketing $1.1 billion in notes in order to pay down its debt. Denmark's largest bank, Danske Bank AS (DNSKY, DANSKE.KO), was offering a five-year note of at least $500 million. Smaller deals from Georgia Power Co. and Transalta Corp. (TAC, TA.T) were also on tap Tuesday.

Meanwhile, Citigroup Inc. (C) is offering about $2 billion in $25 par 30-year trust preferred securities, or TRUPs, as part of its agreement with regulators on repaying federal bailout funds.

Guy LeBas, chief fixed-income strategist at Janney Capital Markets in Philadelphia, said the tone in the corporate market is "good" and pointed out that deals sold on Monday have also performed well in the secondary market.

Brighter tone has extended to the high yield market, where smaller deals have been in vogue for the past several days, punctuated by an occasional larger issue, such as MGM Mirage's (MGM) $845 million offering of senior secured 10-year notes, announced on Monday.

Also on Monday, Building Materials came to market with $325 million in 10-year notes, and Sonic Automotive Inc. (SAH) said it would sell $210 million of eight-year notes.

Activity wasn't limited to U.S. companies or the U.S. market. South Korea's Shinhan Bank, the main banking unit of Shinhan Financial Group (SHG, 055550.SE), raised $700 million in a 5.5-year bond sale Monday, offering a yield of 4.408%.

-By Romy Varghese and Kellie Geressy-Nilsen, Dow Jones Newswires; 215-656-8263; romy.varghese@dowjones.com

(Anusha Shrivastava, Prabha Natarajan, Michael Aneiro and Kejal Vyas contributed to this report.)

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