Issuers, such as mining company BHP Billiton Finance (USA) Ltd and steel maker ArcelorMittal, were able to issue multi-tranche jumbo offerings of USD5.25bn and USD3bn each, tipping February deal volume into record territory above USD90 billion.

That beats out February 2009 (USD72.024bn) for the largest February on record -- and there's still three days left to go in the month. It also takes out January 2012's total of USD79.54bn.

"There is just so much cash sitting on the sidelines because at the end of last year everyone was getting defensive," said Mirko Mikelic, senior portfolio manager at Fifth Third Asset Management. "Now people are jumping on the bandwagon because if you didn't catch the rally earlier this year you lost some performance and need to catch up."

Deal terms are about as favorable as they were in the first quarter of 2011, before the eurozone sovereign debt crisis came back to haunt the markets.

ArcelorMittal, rated Baa3/BBB-/BBB, attracted USD18bn of demand for its deal, led by Citigroup, Bank of America Merrill Lynch and JP Morgan. About USD8bn of that was for the USD1.1bn 10-year tranche, which had about a dozen orders of USD100m or more.

Reliance Holding USA Inc, rated Baa2/BBB, garnered USD3.7bn of demand for its USD500m tap of its USD1bn 5.4% 2022s issued a few weeks ago, enabling it to price about 3 basis points (bp) inside of outstandings.

John Deere Capital Corp, rated A2/A, set a record for lowest financial institutions group (FIG) coupons with its five-year (1.4%) and 10-year (2.75%) tranches that were part of its USD1.5bn three part deal, led by BAML, Citigroup and Goldman Sachs.

Triple-B companies were in huge demand. CSX Corp, rated Baa3/BBB, set a new record for the lowest 30-year triple-B coupon with its USD300m 4.4% deal at 133bp via JPM and UBS.

Viacom, which is rated Baa1/BBB+/BBB+, attracted a USD5bn book for its USD500bn 1.25% three-year at 90bp and USD250m 4.5% 30-year at 150bp, via BNP Paribas, Morgan Stanley and Wells Fargo Securities.

Viacom's three-year set a new low for triple-B coupons of that maturity, and both tranches priced with negative new issue concessions in the low teens.

"The only difference between now and this time last year is that there's still limited access for some of the European banks." said Dan Mead, a managing director on the investment grade syndicate desk in the Americas for Bank of America Merrill Lynch.

"Headline numbers on book size have been stunning, concessions have tightened and ticket sizes are back to where they were at the peak of the new issue market early last year."

RISK-ON AGAIN

The market has had a non-stop rally since the beginning of the year, when investors flipped the switch to risk-on, after the ECB's liquidity facility for European banks kicked in.

The buying frenzy has reached a peak in recent days, as increasing numbers of conservative investors capitulate on cautious positions taken in December.

"A lot of people are going down in quality or moving further out the curve to find excess returns, but trying to outperform has been difficult when deals come in 20bp tighter than talk," said Mikelic. "There is no low hanging fruit anymore."

The Fed's near-zero interest rate policy is also driving an avalanche of cash into the short end of the corporate market from cash managers in search of high quality, short-dated paper as an alternative to Treasuries.

The strength of demand, combined with strong after-market performance by virtually every deal in recent weeks, drew more issuers than expected to the market this week.

"The demand technicals and deal performance that we have been seeing over the past couple of weeks has been very attractive," said Meghan Graper, a director in the Americas investment grade syndicate group at Barclays Capital.

"For issuers it's been very good not just from an all-in coupon basis but also in terms of depth of demand and oversubscription levels, which have generally led to a decline in new issue concessions."

BHP took advantage of the yield grab across the curve by using strong demand at both ends of the maturity spectrum to squeeze in pricing on its intermediate tranches.

The company priced a USD1bn two-year floater at 27bp over Libor and a USD1bn 30-year at 102bp, equating to a negative 10bp new issue concession.

By pricing those two tranches so aggressively, along with a USD1bn three-year at 62bp and a USD1.25bn five year at 77bp, the company pushed down pricing on its USD1bn 10-year -- which priced with a negative 3bp new issue concession.

"It would probably not have been able to get such good pricing on the 10-year if they hadn't used the front end and then the 30-year to take up those two areas of demand," said one market participant.

BHP ended up pricing with just a 10bp differential between the 10- and 30-year part of its curve, compared with the usual 20bp differential for a company of that caliber.

Syndicate desks have been receiving a lot of calls from corporate cash managers in recent weeks, in search of high quality short-dated paper to suit their sensitivities to ratings quality and desire for anything three years and shorter.

It was the bid from corporates as well as state pension funds that led John Deere to add a US$500m 28-month tranche at the last minute.

The equipment maker's finance arm ended up building a book of USD3bn for its entire deal, the other tranches being a USD500m 1.4% five year at 55bp and a USD500m 2.75% 10-year at 77bp. The five-year came 6bp over comparables and the 10-year was priced flat to secondaries.

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