The collateralized loan obligation market hit the ground running so far in 2013, with some $1.8 billion of deals priced and another 13 in the works, according to Fitch. Consensus estimates of full year 2013 issuance, based on the pipeline so far, is between $70 billion and $80 billion, meaning the leveraged loan market could see spreads come in even further.

Fitch’s issuance calendar showed 14 loans worth $15 billion launched in the first two weeks of January, and its forward calendar has $35 billion of deals on the cards.

Fitch says that investors are increasingly willing to take a bath on loan security in exchange for better spreads, gobbling up second lien loans in growing numbers. Second lien issuance hit a post-crisis high of $18 billion last year, and there is already $1 billion on the forward calendar for this year. This is despite evidence that recoveries on second lien loans are more like the pittances often recovered on unsecured bonds.

Demand is so high that it has sloshed over into the secondary market, pushing prices from their 2012 high of 97.94. Fitch says about 80 percent of secondary market loans are now priced at 98 or higher.