The junk bond market continues to chug along, as jumbo issues come out of the pipeline and investors keep snapping them up.

Nearly $2.5 billion of junk bonds had been priced by late last week, bringing year-to-date volume to $13 billion. That compares with $7.5 billion for the same period last year, according to Edward Mally, head of high-yield research at CIBC Oppenheimer Corp.

Meanwhile, flows into high-yield mutual funds totaled $554 million last week, according to AMG Data Services, Arcata, Calif.

"In general, the markets have a pretty good tone," said Robert Kern, a portfolio manager at Safeco Asset Management in Seattle.

"There's enough cash coming into the market at this point to absorb new deal flow," Mr. Kern said. "We're continuing to see healthy inflows and continued interest by collateralized bond obligations, insurance companies, and pension funds."

Indeed, among the new issues priced last week, Chase Securities Inc. sold $650 million in senior subordinated notes for Magellan Health Services Inc., an Atlanta-based health care provider. Demand was so heavy that Magellan bumped up the offering from $400 million.

In addition to the junk bonds, Chase made a $700 million loan to Magellan. The financing package helped to fund the $560 million acquisition of Merit Behavioral Care Corp., announced in October, and to refinance both companies' debt. Chase also advised Magellan.

With the forward calendar at $6.8 billion, according to KDP Investment Advisors, Montpelier, Vt., strong deal flow is expected to continue in the near term.

Among the issues expected to be priced in the next few weeks, Merrill Lynch & Co. and CS First Boston started the roadshow last Monday for a $115 million junk bond offering to help finance the construction of Aladdin Hotel and Casino in Las Vegas. Bank of Nova Scotia, Merrill Lynch, and CIBC Oppenheimer are also leading a $410 million loan.

Donaldson, Lufkin & Jenrette Inc. is set to bring an $80 million issue to market for Duane Reade Inc., Manhattan's largest drugstore chain. DLJ also led a $100 million initial public offering for the company Thursday.

Nextel Communications Inc., a McLean, Va., a personal communications system network company, is preparing to sell $800 million of zero coupon bonds and $500 million of preferred stock that was supposed to be priced last Friday.

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