By Shankar Ramakrishnan

Jan 13 (Reuters) - U.S. integrated midstream

infrastructure company Plains All American Pipeline ( PAA ) on

Monday priced a $1 billion investment-grade bond offering, the

year's first to finance an acquisition.

Proceeds will be used to fund an $800 million purchase

of Ironwood Midstream Energy Partners and hybrid shares from

EnCap Flatrock Midstream, Plains All American said

earlier this month

.

The offering of 10-year bonds set the stage for what is

expected to be a busy year of bond financing for acquisitions.

Syndicate bankers on average are expecting around $1.65

trillion of new investment-grade bonds in 2025, topping the $1.5

trillion in 2024, making this the second most prolific year for

such offerings, according to Informa Global Markets.

Daniel Krieter, credit strategist at BMO Capital, said

mergers and acquisitions could account for about 14.5% to 15.5%

of total investment-grade bond volumes this year, up from about

13.5% in 2024.

A spike in Treasury yields, due to expectations of a

higher-for-longer interest rate environment, could limit such

debt offerings, said Richard Familetti, chief investment

officer, U.S. Total Return Fixed Income, at fund manager SLC

Management.

"It is likely companies may prefer to finance their M&As

through a combination of debt and equity in part due to the

higher costs, and also to avoid getting penalized by credit

rating agencies for taking on too much debt," he said.