Institutional investors are regaining their appetite for debt securities but banks, mortgage originators, investment banks and corporate treasurers should not get too excited; investors have their sights on cheap securities in the secondary market rather than primary issuance.Fund managers report that with yields almost 200 basis points over bills in their enhanced cash funds and double-digit running yields in their high yield funds, wholesale investors are starting to send money their way.ING Investment Management head of fixed income Greg Michel said: "We believe we are in the value zone. Flows are OK, we have a surplus of liquidity and we are making selective investments in what we think are mis-priced securities."ING's Diversified High Yield Trust has moved from a defensive 20 per cent cash allocation earlier this year to 12 per cent today.Michel's hunting grounds are the ASX hybrid securities market and Australian RMBS.Michel said the hybrid securities market attracted a diverse range of investors, including geared retail investors. There has been some forced selling.The fund has been a buyer of National Australia Bank income securities at 200 basis points over the bank bill swap rate.He said good quality Australian RMBS was coming out of conduits and other sources at spreads that represented "dramatically good value".So far none of this has helped primary issuers. "It is still too expensive for them. RMBS in the secondary market is not at levels where you expect to see new issues."We will need stronger inflow before there is sufficient demand to bring spreads in. We are pretty fully invested now."Colonial First Sate Global Asset Management co-head of global fixed interest and credit, Tony FitzGerald, agrees. He said wholesale investors were looking to get back into credit and the Colonial funds had been doing some buying. Colonial has a private debt mandate that allows it to participate in corporate debt syndications, leveraged finance deals and so on. FitzGerald said: "There is no business coming from the investment banks. There has been nothing this year. "The only issuers prepared to pay the high spreads are the big local banks. They are paying a premium for liquidity because they want to win market share."FitzGerald said most of his credit investing has been overseas, where spreads are higher and the strong Aussie dollar provides extra return.Another manager looking offshore is MLC. The group has awarded a mandate to a US investment manager to invest directly in senior secured bank debt.Alternative asset manager Oaktree Capital will build a portfolio of senior secured debt, sourced directly from syndicating banks, to go into MLC's Diversified Debt Fund.MLC portfolio manager for debt Peter Sumner said the corporate debt market was characterised by oversupply and weak demand. There was an opportunity to buy high quality assets with defensive characteristics at high yields.Sumner said: "Investors are not looking for levered credit. The originate, syndicate and securitise model has gone. It may come back but for the time being there is no CDO or CLO issuance."