The market for PIPEs keeps going mainstream. The news that buyout firm Kohlberg Kravis Roberts is doing a $700 million PIPE -- short for private investments in public equity -- with Sun Microsystems ( SUNW) is a big vote of confidence for the ailing tech giant. In the privately negotiated deal, Sun sold two convertible bonds to a European-based KKR fund. The bonds convert into shares if the computer hardware manufacturer's stock rises to $7.21. With shares of Sun most recently trading at $6, the private equity firm is clearly making a long-term bet on the company's prospects. But the KKR investment is more than just a bet on a turnaround in a single company. It's further evidence that PIPEs, once a prime source of funding for cash-strapped small-cap companies, are becoming a major financing vehicle for big companies as well. In fact, 2006 was the best year ever for the PIPEs market. In all, U.S. companies raised a little over $28 billion through 1,326 PIPE deals, besting the old record set in 2000 by some $4 billion, according to PlacementTracker. The PIPEs market keeps expanding despite a long-running regulatory investigation that has cracked down on abusive trading by hedge funds in shares of small companies doing PIPEs. Some had feared the investigation would be a death-knell for the PIPEs market.