Signs of Life in Capital Markets

Updated from 3:26 p.m. EST

While analysts and investors debate whether the recent rally is sustainable, a host of companies seized the opportunity to raise cash by offering stock and debt to the public.

After almost grinding to a halt this summer, the IPO and follow-on markets have been invigorated this month, with 46 issues debuting so far, according to Dealogic. That's the highest number since June, when 79 deals were sold.

Just this past week, a bevy of new stock sales were priced, with IPOs coming from Safety Insurance Group(SAFT Quote), restaurant chain Cosi(COSI Quote) and Impac Medical(IMPC Quote).

Meanwhile, Macerich Co.(MAC Quote), Great Plains Energy(GXP Quote), Myriad Genetics(MYGN Quote) and a slew of other firms embarked on secondary offerings in a sign that demand may finally be picking up.

Over Water

Investors reacted warmly to the IPOs, with Safety rising 8% to $12.95 on its debut Friday, while restaurant chain Cosi rose 7% to $7.51. Impac Medical, which went public Wednesday, surged 18% on its first day of trading and has continued to climb since. Even some of those companies selling additional stock have fared reasonably well.

Macerich, which said it would sell 13.2 million shares at $29 each, was up 0.6% Friday to $29.20 and Great Plains, which priced 6 million shares at $22, rose 2% to $22.57.

Companies that conduct follow-on offerings typically see their share prices fall as the new equity dilutes existing ownership, so gains, however muted, are a victory.

New Borrowing

In another encouraging sign, corporate debt issuance has grown this month as interest rates sit at 40-year lows, spreads between corporate bonds and U.S. Treasuries have narrowed and investor demand remains strong. Indeed, 107 corporate bonds have been issued so far this month -- the highest level since June.

J.P. Morgan(JPM Quote), Household International(HI Quote) and Bank of America(BAC Quote) all sold about $1 billion in debt this week, while IBM(IBM Quote) raised over $2 billion.