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Abstract

We examine the aggregate volume of straight debt initial public offerings (DIPOs) from 1970 to 2010. We find that aggregate DIPO activities display wave patterns. Both the number and total proceeds of DIPOs vary substantially over time. DIPO volume is significantly associated with yield spread, aggregate book-to-market ratio, stock return volatility, lagged equity IPO volume, and term spread, suggesting that investor sentiment and capital market conditions play significant roles in explaining time variations in DIPO volume. We also find that speculative-grade DIPO issues synchronize with the business cycles, while investment-grade issues display a steady or countercyclical pattern.