McDonald's this week borrowed $450 million from investors, issuing 10-year bonds that yield 3.5%. That's a record low rate for a large corporate offering, the Wall Street Journal reported Thursday.

For comparison, 10-year debt of the federal government, backed by its taxing authority, yields nearly 3% now and yielded 4% as recently as April. House buyers, whose loans are backed by the value of their properties, pay just over 4% on 14-year loans that is, if they can get the loan to begin with. These days, buyers must make significant down payments and prove their creditworthiness.

So why does McDonald's get such plum rates? Two reasons:

First, corporate bonds in general are in strong demand at the moment, as evidenced by broadly low rates. Bank of America Merrill Lynch's (BAC) U.S. Corporate & High Yield Index recently fell to its lowest level in more than six years.

Savers are squeezed between punitively small returns on bank deposits (a result of the Federal Reserve's policy of targeting record lows for the banking system's core interest rate) and extreme volatility in stocks (epitomized by the "flash crash" of May 6).

Sales of U.S. corporate bonds, which exist somewhere between bank deposits and common stocks in terms of riskiness, jumped 31% this month to a July record, as companies rushed to take advantage of investor demand.

Of course, the surge in issuance and the low rates together increase the riskiness of corporate bonds, all else held equal, raising the question of whether bonds are in a bubble, and whether stocks are now the safer investment.

Consider McDonald's (MCD). The company is expected to earn $4.50 a share this year, which, divided by its stock price, makes for an earnings yield of 6.5%. That's three percentage points more than its bond investors get, assuming the company's earnings are put to work for the benefit of investors, making them the equivalent of bond payments. That seems a fair assumption; McDonald's pays about half its earnings yield to shareholders directly in the form of a 3.2% dividend yield, and on the capital it invests in its business, it recently earned a return of about 15%.

That brings us the second reason McDonald's can borrow so cheaply: It doesn't need the money. The company borrows merely because the leverage is so cheap. McDonald's generates about $4 billion in free cash per year, enough to retire its net debt in two years. Through the recent recession, when profits for many U.S. companies plunged, profits at McDonald's increased. Sales at the company's longstanding stores recently grew about five percentage points faster than those of the average for fast food chain.

Among fears facing investors at the moment -- ballooning government debt, sclerotic stock trading, the slow theft of inflation on bank deposits -- a decline in Big Mac demand over the next decade simply doesn't rank that high.