(January 17) – “Kent Kalkwarf knew he had his work cut out for him last month,” writes Gregory Zuckerman in today’s Wall Street Journal.

“The chief financial officer at cable-television provider Charter Communications Inc. was heading to the junk-bond market, hoping the St. Louis company could raise at least $850 million from investors. But with corporate defaults climbing, the economy slowing and the junk-bond market in a two-year funk, it wasn’t clear he could pull off the deal.”

“Then Mr. Kalkwarf caught a lucky break. Just as he began pitching the bonds to a major mutual fund in Los Angeles on Jan. 4, the Federal Reserve announced its surprise, half-point interest-rate cut. Suddenly, Mr. Kalkwarf’s bonds were as hot as Super Bowl tickets, with investors lighting up the phone lines, eager to get in on the deal. The company ended up selling $1.75 billion in bonds — more than double its initial goal.”

” ‘This gets Charter a long way toward completing its funding need,’ said Mr. Kalkwarf, whose company will use the funding to upgrade its cable systems. ‘A month ago, we didn’t think we could raise so much.’ “

“Charter isn’t alone. In many parts of the bond market, the Fed’s move already is having the desired effect, at least so far. A cross-section of companies are selling bonds, including some lower-tier issuers in the junk-bond market, such as upstart telecommunications companies.”

“In fact, prices of junk, or high-yield, bonds, have been rising as money shifts into the market from small and large investors alike, creating new demand for high-yielding securities.”

“The shift in the market is startling. So far this month, $3.2 billion in junk bonds have been sold, up from a paltry $943 million for all of December. January is likely to be the busiest month since September, bankers say. All this comes amid eye-popping returns; last week was the best for the high-yield market in five years, according to Banc of America Securities, as investors flocked to yields that average more than 13%. So far this year, junk bonds have scored returns of 3.6%.”