“A while back I put together a concise synopsis of the way the cycle in bond issuance underlays the rise and fall of the distressed debt cycle. Here it is: Risk-averse investors limit quantities issued and demand high quality. High-quality issuance leads to low default rates. Low default rates cause investors to become complacent and risk-tolerant. Risk tolerance opens investors to increased issuance and lower quality. Lower-quality issuance eventually is tested by economic difficulty and gives rise to increased defaults. Increased defaults have a chilling effect, making investors risk-averse once more. And so it resumes.”