In one sign that the capital markets are looking up, Merrill Lynch & Co. Inc. doubled the size of a planned offering overnight to US$2 billion of Liquid Yield Option Notes, due 2032.

The transaction size was increased from last night’s announced US$1 billion offering due to strong investor demand. The LYONs are zero coupon floating rate senior notes convertible into Merrill Lynch common stock. The offering is being managed alone by Merrill Lynch’s broker-dealer subsidiary, Merrill Lynch, Pierce, Fenner & Smith Inc.

Merrill Lynch will use the proceeds of the offering for general corporate purposes.