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Cigna Corp. sold $20 billion of bonds to fund its takeover of Express Scripts Holding Co., making for the U.S. corporate-bond market’s second-biggest of the year.

The health insurer issued senior unsecured bonds in 10 parts, according to a person with knowledge of the matter. The longest portion of the offering, a $3 billion security maturing in 2048, yields 1.87 percentage points above Treasuries, after initially discussing around 2.05 percentage points, said the person, who asked not to be identified because talks with potential investors are private.

The sale is leading what’s been a busy start to September, with some strategists already raising their monthly issuance estimates. Investors, anticipating that a bulging pipeline of M&A deals would bring a wave of debt sales after the summer lull, have been selling debt the past few weeks to make room for new securities, said Travis King, head of investment-grade credit at Voya Investment Management in Atlanta.

(Related: Major Health Industry Deals May Be Moving Closer to Approval)

“It’s the kind of deal where everyone is going to feel that they need to own this,” King said before the deal priced. “It’s one of those classic mega deals that gets everyone’s attention.”

The expected boost in new-issue supply helped boost the amount of yield investors demand to hold corporates instead of government debt, Bloomberg Barclays index data show. Investment-grade bond spreads over Treasuries have widened by 6 basis points since the end of July to 115 basis points.

Cigna agreed in March to buy Express Scripts for $54 billion in an attempt to save money for clients by bringing two branches of the health care services sector under one roof. The deal is nearing regulatory approval, and shareholders have already cast votes in favor of the combination. Activist investor Carl Icahn, who had said it would be a “travesty” if it were to proceed, dropped his fight to block the takeover last month.

At the time of the deal announcement, Cigna said it planned to issue $22.5 billion of new debt and commercial paper to fund the acquisition plus $26.6 billion of new equity, according to a presentation. Moody’s Investors Service, S&P Global Ratings and CreditSights said earlier Thursday the issuance could be $23.5 billion.

Acquisition Spree

A $2 trillion global acquisition spree has paved the way for a spate of jumbo bond sales. CVS Health Corp. issued $40 billion of debt in March to help finance its takeover of Aetna Inc. That was the biggest bond sale of the year and third-largest ever in the U.S. market, data compiled by Bloomberg show. Verizon Communications Inc.’s $49 billion offering in 2013, which financed the telecom giant’s acquisition of Vodafone’s stake in Verizon Wireless, still ranks as the largest ever.

When CVS sold its bonds, it wasn’t near regulatory approval yet and a federal judge hadn’t made a landmark ruling to clear AT&T Inc.’s takeover of Time Warner Inc., making way for more M&A. That’s why CVS issued some of the debt at a discount but Cigna didn’t have to, Matt Brill, senior portfolio manager at Invesco Ltd., said before the deal priced. The initial price talk suggested that the market wouldn’t require a discount, and that both Cigna and its bankers felt very confident that the acquisition will go through, Brill said.

“There’s more optimism in the market, and this deal should do well and create an encouraged buyer base for the rest of the month,” he said earlier Thursday.

Bank of America Corp., JPMorgan Chase & Co., Morgan Stanley and Wells Fargo & Co. led the sale of Cigna’s bonds, which are being issued through a parent entity, the person said. A representative for Cigna didn’t provide a comment.

—With assistance from Allan Lopez.

— Read Icahn Drops Fight to Block Cigna’s Express Scripts Dealon ThinkAdvisor.

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