Wall Street underwriters enjoy record year

"It is certainly surprising to many, after 17 (Federal Reserve) rate hikes, with Ford <F.N> and General Motors <GM.N> moving into non-investment grade, and a hedge fund evaporating within a week," said Raj Dhanda, head of fixed-income capital markets at Morgan Stanley, referring to Amaranth Advisors LLC.

Dhanda said, though, that with record amounts of debt maturing, "net issuance is not perceived as being out of balance with the supply of capital."

IPOs

U.S. investment-grade and junk bond issuance rose 39 percent from a year earlier to $1.07 trillion, Thomson said.

Hybrid securities, which include bond and stock features, grew in popularity among issuers seeking to preserve their credit ratings, and investors seeking extra yield. Even Ford this month was able to sell $4.5 billion of convertible bonds.

Global equity issuance rose 32 percent to $694.8 billion, while initial public offering volume surged 56 percent to $257.3 billion. Fourth-quarter IPO activity was the busiest in about six years.

Bankers said mergers may help keep debt issuance in 2007 comparable to 2006. Private equity firms may also keep IPO bankers busy.

"A lot of venture capital and private equity helped fund and develop these companies, and in many cases will eventually need an exit," said David Topper, head of equity capital markets for the Americas at JPMorgan.

(Additional reporting by Yung Kim)