A funereal mood dominated the debt markets in October. And in November. And in December.

Coming into January, underwriters suffered through a bout of head scratching: Was trouble in Europe, economic uncertainty in the U.S. and anxiety over global inflation enough to continue to stifle new debt issuance and investors' animal spirits?

The relieved answer: not for long. Issuance surged in early 2012, from dividends for sponsor-backed companies such as TPG Capital and Bain Capital LLC's Quintiles Transnational Holdings Inc. to pricing of debt for buyouts of companies such as Samson Investment Co., bought out in 2011 by a Kohlberg Kravis Roberts & Co. LP-led consortium.

"For the most part, everyone sat on cash in the fourth quarter of 2011," says Kevin Smith, co-head of Macquarie Capital's high-yield team. "We're clearly in the midst of an upswing, with an issuer-friendly environment in both bank and bond markets."

The cause for the revival, which first started in the high-yield bond market and has spread to other paper, remains largely anecdotal. Europe has appeared to stabilize -- "become more stable" is probably more accurate -- and the skies over the U.S. macroeconomy have brightened a bit. And it doesn't hurt the high-yield bond market that the Federal Reserve is keeping rates low. "The Fed has come out and said rates are going to stay low through 2014, and that is certainly front of mind with investors and leading them to invest in high-yield bonds," says John Rote, head of the high-yield syndicate at Bank of America Merrill Lynch.

Spreads over the past six months provide the most direct explanation for the renewed activity. Six months ago, the spread between high-yield bonds and Treasury notes was 720 basis points, according to Citigroup Global Markets Holdings Inc. It widened to 880 in early October, and bumped up a further 100 basis points in November. Then, just as quickly, spreads tumbled, standing at 593 basis points as of March 1.

The result? Seemingly every company with a looming wall of debt maturities is looking to refinance, from Quintiles to TPG and Apollo Global Management LLC's Caesars Entertainment Corp. to Blackstone Group LP's Freescale Semiconductor Holdings I Ltd., all eager to get their hands on cheap debt.

Even though junk bond spreads are tight, investors are still buying. Sources say that's because, in the search for yield, bonds still produce the safest bet, more so than term loans. Plus, investors often become focused on specific industries. Right now, they're targeting energy because they say demand should almost always exist for oil and natural gas, even if pricing fluctuates, and there's a scramble for shale plays. Those issuing debt -- companies looking to refinance or private equity firms financing a buyout -- have moved to take advantage of spreads.

The $7.2 billion leveraged buyout of Samson by the KKR group is a prime example. Announced in November, the deal's financing launched in early February with $2.25 billion in 10-year senior unsecured notes pricing at 9.75%, wide of price talk of 9.5%. The rest of the financing is coming from a $2.25 billion reserve-based credit facility, only part of which will be drawn.

Interest in the notes was substantial. There looks to be similar interest in a deal announced at the end of February: Apollo's $7.15 billion buyout of El Paso Corp.'s exploration and production unit.

Not only are the capital structures of the deals quite similar -- Apollo is using a $3.5 billion senior unsecured bridge facility and around $1 billion or less of a $2 billion reserve-based loan facility -- but the businesses resemble each other. Both explore for and produce oil and natural gas, mainly in the U.S. Their reserves are also similar. And while Samson has been private, the similarity in price for the two deals suggests similar revenue levels.

Other energy businesses have found significant interest as well. KKR, TPG and Goldman Sachs Capital Partners' Energy Future Holdings Corp., formerly TXU Corp., added $200 million in 11.75% senior secured second-lien notes due 2022 to its $800 million offering, completed in February. Oil and gas producer Linn Energy LLC priced $1.8 billion in seven-year senior unsecured notes at par to yield 6.25% at the end of February.

The next test of the markets: getting beyond energy.

David Holley reports on leveraged finance for The Deal magazine.