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), restaurant chain Cosi ( COSI) and Impac Medical ( IMPC).

Meanwhile, Macerich Co. ( MAC), Great Plains Energy ( GXP), Myriad Genetics ( MYGN) 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), Household International ( HI) and Bank of America ( BAC) all sold about $1 billion in debt this week, while IBM ( IBM) raised over $2 billion.

"There's tremendous demand largely because of a large build-up of cash at pension funds and other firms," said Peter Palfrey, portfolio manager at Loomis Sayles & Co. in Boston. "Things got so oversold."

Still, Palfrey said he expects the credit market to all but shut down next week ahead of the Thanksgiving holiday, and he doesn't expect it to pick up again until after Christmas. While Palfrey thinks the worst of the selling may now be over, other analysts aren't convinced that the environment for new issues is really starting to improve.

Best, Brightest

"In recent memory, this may be an astounding move in activity but it's still an extremely difficult market," said David Menlow, analyst at IPO Financial.

Companies are only successful in issuing stock if they have pristine balance sheets, and even then they must reduce their offering prices in order to stoke investor interest. Safety Insurance, for example, cut its price to $12 a share from between $13 and $14 earlier in the week.

Cosi, which raised $38 million after selling 5.6 million shares at $7 each, also reduced its offering price from an expected range of $8 to $10.

"Prices are being cut to levels that investors will respond to," Menlow said, adding that "every stock is being heavily scrutinized to see if it is financially sound."

Impac Medical, which makes information technology systems to treat cancer patients, was the perfect IPO candidate for this environment. The company has seen sales grow at an annual rate of more than 29% since 1998, while operating income has grown at a rate of 45% per year.

Massachusetts' No. 3 car insurer Safety Insurance was another fairly safe bet as investors have tended to embrace insurance IPOs this year as premiums have increased. The company posted a net profit of $4.8 million in the six months ended June on total income $261 million. That compares with net income of $4.4 million on total income of $238 million in the same period last year.

Less explicable was Cosi's ability to sell an IPO and rally on its first day. The company posted a loss of $6.2 million on revenue of $18.1 million in the three months ending in April, compared to a loss of $6.4 million on revenue of $15.9 million in the year-ago period.

Because only a handful of restaurants have gone public in the last couple of years, some analysts said investors may be attracted by the pure novelty. But the fact that this was enough to draw buyers does suggest at least a temporary change in investor psychology.

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