"When you've got $250 billion chasing $100 million of new issuance, prices go up," he noted.

The new issuance of private junk bonds is reaching levels we haven't seen since the mid-80's.

With defaults running at a record clip, new issuance in the market dried up.

At the current pace, the junk bond market should set an annual record for new issuance, topping the $128.1 billion of last year.

One element working in California's favor is that new issuance is expected to be down 15 percent this year from the last year's record-setting level.

These investors, he added, "buy dips and they may even sell rallies to make room for the new corporate issuance."

Or new issuance will be so big that spreads will have to widen out.

The investment banker said he expected new corporate issuance to remain heavy next week.

Total new issuance next year is expected to drop 21 percent, to $185 billion, the Public Securities Association said.

We're not going to get back to the Drexel days, with $30 billion in new issuance a year.