Hartford Financial Services Group Inc. (HIG) offered its first corporate bond deal since 2008 Thursday as part of its plan to repay $3.4 billion in federal bailout funds.

Hartford's $1.1 billion three-part bond deal sold at attractive rates that underscored the recovery of the capital markets. The sale came a day after the insurer priced $1.45 billion in equity and $500 million in convertible bonds.

In addition to helping to buy back preferred stock from the government, proceeds from the bonds will help Hartford refinance debt maturing in 2010 and 2011, although there are no immediate buyback plans, a spokeswoman said. Hartford had been hit hard by investment losses and annuity obligations during the market panic of 2008.

The insurer's deal came as Shell International, the finance arm of oil major Royal Dutch Shell, sold $4.25 billion in high-grade bonds, tying for the sixth-largest deal so far this year, according to data provider Dealogic. Meanwhile, J.P. Morgan and Credit Suisse each sold around $1.5 billion in new bonds.

"It's been a food fight for new deals," said Mirko Mikelic, portfolio manager at Fifth Third Asset Management in Grand Rapids, Mich. "Cash is burning a hole in people's pockets."

New deals were seeing orders well in excess of their size, according to market participants. Indeed, demand allowed Hartford to offer investors a smaller risk premium--less compensation over risk-free Treasurys--than forecast when the deal was earlier shopped around.

In addition, the risk premiums on the five-, 10-, and 30-year bonds were much lower than those seen on financial bonds with similar maturities and ratings, based on Bank of America Merrill Lynch data as of Wednesday. For instance, a financial bond rated in the triple-B to A range and maturing between 5 and 10 years yields 2.98 percentage points over Treasurys, while Hartford's new five-year was priced at 1.60 percentage points over Treasurys.

The risk premium on the new 30-year note is even 10 basis points lower, at 2.05 percentage points over Treasurys, than the risk premium on a 6.1% note due 2041, quoted at 2.15 percentage points over Treasurys on MarketAxess.

Risk premiums, after a blip last month from concerns over European debt woes, have been grinding lower as investors snap up highly rated bonds yielding more than government securities.

"They're trying to grab yield where they can," said Joe Calvo, head of corporate credit trading at R.W. Pressprich & Co., a fixed income broker-dealer in New York. He added, "memories are short."

Thursday's slate of new bonds follows offerings from SLM Corp. (SLM), or Sallie Mae, and American International Group Inc.'s (AIG) International Lease Finance Corp. unit, two issuers who a year before "would have been laughed out of the market," said Guy Lebas, chief fixed-income strategist at Janney Montgomery Scott. "That shows liquidity and investor willingness to lend has increased dramatically over the past 12 months."

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

(Prabha Natarajan and Kelly Nolan also contributed to this article.)
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