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The Allstate Corporation is looking to add $20-25 million in bonds of distressed investment-grade telecoms, such as Qwest Capital Funding,Sprint Corp., or WorldCom. Mark Cloghessy, portfolio manager overseeing the firm's $13 billion investment-grade bond portfolio, says he believes investor concerns that these companies will not be able to maintain access to funding are exaggerated, and that spreads will narrow. He would like to add the Qwest Capital Funding 7.25% notes of '11 (Baa3/BBB), which were trading at 490 basis points over 10-year Treasuries on March 22. The issue was trading 130 basis points wide of the Qwest Corp. 8.875% notes of '12 (Baa2/BBB) on March 22. Cloghessy says that while Qwest Corp. produces more cash flow, he does not believe it justifies the spread differential, noting that Standard & Poor's gives the Qwest Capital Funding issue the same rating. Cloghessy would rather add Qwest than Sprint or WorldCom because he does not own any Qwest paper. However, he is concerned about the Securities and Exchange Commission inquiry into the company. Before investing, he would like some assurance that the company will go ahead with a planned convertible bond issue to provide much-needed liquidity.

A time of the signs ... Loan Market Week has been remiss in not updating the story of the riveting saga it first reported on back in December: the state of the large sidewalk sign in front of J.P. Morgan Chase's Park Avenue headquarters. When we last reported on the condition of the imposing nameplate, the banking behemoth had covered it with a blue vinyl slab with the name and logo smartly embossed in white letters. The new covering went over the metal panels sporting the JPMorganChase name which went over the granite/marble sign sporting the Chase Manhattan name. The metal panels were looking a little rough, with some details in the letters knocked out and some minor discoloring on the borders. But in an incredible plot twist, it turns out the blue sign was just a temporary measure until a brand spanking new metal sign was set to be mounted, in all its glory. Stay tuned.

This chart, provided by Citibank/Salomon Smith Barney Inc., tracks bid-ask prices for par credit facilities that trade in the secondary market. It also tracks facility amounts, ratings, pricing and maturities.

Reto Koller, portfolio manager with Winterthur Investment Management, will switch from a neutral Treasuries exposure to a barbell strategy in a couple of weeks by moving out of five- to 10-year Treasury allocation and buying into three-month and 30-year Treasuries. The move would involve 10% of the portfolio or $200 million. A barbell strategy increases protection against price depreciation along the intermediate part of the yield curve. Koller reasons that by mid-April, the Treasury curve will flatten ahead of the first Federal Reserve tightening which he anticipates will be in May following signs the economy is growing. He says that the market's anticipation of the Fed move will lead to a flatter yield curve as early as mid-April. Koller says a trigger for his barbell strategy will be when the yield differential between the long bond and the two-year Treasury decreases to 200 basis points. Last Monday, this yield differential was 211 basis points.

Tatsuya Takeda, v.p. in the e-markets group at JPMorgan in Tokyo, has joined Nikko Salomon Smith Barney in a new position as a director of structured solutions in the fixed income group. He will be responsible for marketing exotic interest-rate derivative structures, according to an official at the firm. Takeda, who starts next week, reports to Ikuo Morimoto, head of fixed income in Tokyo. The official said the firm is looking to expand its presence in the structured products market because of increased demand, declining to elaborate. Morimoto declined comment.

UBS Warburg has launched a fixed-income and derivatives research portal that consolidates its research across the fixed-income markets. UBS instigated the move to centralize its fixed-income and derivatives trading recommendations in the over-the-counter markets as well as general market comments, said Guillaume Salomon, fixed-income strategist in London.

Source: www.loanmarketweek.com

Source: www.bondweek.com

Alternative Asset Advisors, a Swiss hedge fund manager with USD900 million in assets under management, has structured an equity-linked note that uses over-the-counter equity derivatives. Tony Morringiello, ceo in Geneva, said the five-year capital-guaranteed notes are referenced to its fund of global diversified hedge funds, known as ACE. He referred further queries to officials in the fund derivatives group at BNP Paribas, which structured the deal.

Income Partners Asset Management (HK), a fixed-income fund with USD550 million under management in Hong Kong, is considering issuing its first synthetic collateralized debt obligation in the coming months. The CDO will be structured entirely on Asian credit-default swaps. "We've got the technology to do this in-house," said Francis Tjia, executive director. Income Partners currently has four cash collateralized bond obligations in its investment portfolio, totaling USD400 million, of which two were structured in-house.