We've noted recently that some markets--discredited not too long ago--are enjoying a resurgence of sorts. The CDS and CDO markets have been on a mini-roll, that's for sure.

Business Week highlights another market that has similarly come storming back: The market for PIK bonds. This might seem surprising given that some private equity firms stuck their investors with a whole lot of debt that still hasn't recovered. The most talked about example was the deal by KKR and TPG for the utility then known as TXU. But some investors are willing to look beyond the past.

The article notes that hedge funds and other investors have snapped up $1.85 billion of such bonds since late last year. These do not seem to be the debt-and-deal-driven deals and for all we know investors looked into the likelihood that more debt will be used to pay interest. Demand for at least one offering, by Wind Acquisition Holdings Finance, was especially strong. So this is either a good sign or a bad sign, depending on your point of view.  

For more:
- here's the article