Booming debt markets have also helped private equity giants line up financing for buyouts or to alleviate pressures on existing debt saddled investments.

On Monday, private equity giant Permira said it would buy Ancestry.com ( ACOM) for $1.6 billion, while media reports also indicated Cerberus Capital Management may buy struggling supermarket chain Supervalu ( SVU).

Other highly watched prospective private deals include Bloomberg reports that KKR, TPG and Bain Capital may bid for software maker BMC Software ( BMC) and a well publicized campaign by Best Buy's ( BBY) co-founder Richard Schulze to take over the struggling electronics retailer. Both prospective deals hinge on readily available debt financing.

An October Moody's report indicates private equity firms can also use pre-crisis like debt markets to pay themselves giant dividends, seen in big recent announcements made by Booz Allen Hamilton ( BAH), Warner Chilcott ( WCRX) and HCA ( HCA), among others.

Still, as Fitch Ratings warns in its Monday report, booming junk debt markets aren't a panacea for cash strapped companies or for the broader economy. Were growth not to return, eventually something has to give.

"The Fed's efforts to revive the economy and a positive resolution to the U.S. fiscal cliff remain critical even as the heightened demand for yield product is allowing more highly levered and vulnerable companies to access the debt markets," writes Fitch. "A more robust economic environment is especially important over the next several years as the liquidity boost from record issuance diminishes," the agency adds.

For more on how Fed policies are causing investors to rethink their 2012 playbook, see why Warren Buffett's Wells Fargo investment hinges on Bernanke and why bank stocks may face Fed destruction in 2013 .

-- Written by Antoine Gara in New York

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