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Qwest Corp., a subsidiary of debt-laden Qwest Communications International, is seeking a $1 billion term loan from a seemingly responsive bank debt market. Despite being a senior unsecured deal, investors are still keen on the loan's closeness to the former US West assets, which now comprise Qwest Corp. Qwest acquired baby bell US West in 2000. "[Qwest Corp. is] probably the safest part of the company," said Michael Schroeder, president of investment management firm Wasmer, Schroeder & Co. "That's where all the cash flow is." An investor concurred, noting that would help balance out the fact the deal is unsecured and pari passu with the company's other senior unsecured debt.

Stone Tower Capital is attempting to raise the debt for its debut collateralized loan obligation, which will be composed of up to $300 million of secondary market leveraged loans bought from Credit Suisse First Boston. CSFB is also the lead underwriter for the deal, said to be structured as a static pool with no re-investment options and a short tenor of approximately three-and-a-half years. The manager will be able to sell problem loans. "It's very compelling, very different and very interesting," said one loan market source.

UBS Warburg is raising the debt for Prudential Capital Group's Dryden 4 collateralized loan obligation. The prospective deal comes shortly after Ross Smead's leveraged bank loan group at Prudential raised debt for the $304 million Dryden 2002-3 CLO last December. Investors in CDO paper are said to be looking at the approximately $300 million deal over the coming weeks. This will be the first CLO that UBS has underwritten since bringing on board Mike Rosenberg and Jeff Herlyn as co-heads of the global credit CDO group from J.P. Morgan in March. UBS officials declined comment and Smead did not return calls. The last Prudential CLO was underwritten by Salomon Smith Barney.

Wachovia Securities is shopping a $225 million term loan for Gray Television that replaces the company's existing "B" loan at a tighter LIBOR plus 21/4% spread. The new "C" tranche will take out the "B" piece, which is priced 50 basis points higher, said a banker familiar with the credit. The existing credit was completed last October and includes a seven-year, $75 million revolver and an eight-year, $375 million "B" piece. The banker said the combination of better market conditions and improved company performance prompted Gray to seek the refinancing. He would not specify commitment levels to the loan as of late last week. James Ryan, v.p. of finance and cfo of Gray, could not be reached by press time.

WCI Steel has violated a covenant under its $100 million credit facility, leading the company to pursue a financial restructuring. Accordingly, Moody's Investors Service has downgraded the ratings assigned to WCI Steel and its holding company, Renco Steel Holdings. WCI's bank debt rating was lowered from B2 to B3. The bank loan rating reflects the value of the receivables and inventory that secure the credit line, of which about $40 million is drawn.

West Corp. has closed on a $325 million credit facility from Wachovia Bank to support the $400 million acquisition of InterCall from ITC Holding Company, stated Paul Mendlik, executive v.p., cfo and treasurer for West Corp. The new financing includes a $125 million revolver and a $200 million "A" term loan. West Corp. decided to tap the bank loan market for the acquisition financing because of the attractive interest rates, noted Mendlik. Additionally, loan financing matches the company's needs most appropriately as West Corp has a very strong balance sheet and strong cash flows available to service the debt on a fairly short repayment schedule, Mendlik added.

As LMW went to press last week, Wyndham International was expected to receive all the votes it needed to pass an amendment extending the maturity of its increasing-rate loan. According to market players, the new draft will have the company's IRL mature a month before the June 2006 expiration date on its "B" loan. The facility was set to mature in June 2004. The market for the company's bank debt was stronger on the prospect that the amendment, and the extra incentives it provides, will be completed. The IRLs were quoted in the 83-841/2 context and the market for the "B" loan was 801/2 -811/2. A $10 million combination of the two facilities traded last Thursday.

Large pieces of Petroleum Geo-Services (PGS), a Norwegian oilfield service company, have been trading in the mid-to-high 50s as the company pursues a restructuring. A $15 million piece is believed to have changed hands in the 58 context in the last two weeks and an $80 million piece was said to have traded in the 55-58 range early last week. Whether the pieces traded into European or U.S. firms could not be determined. One dealer noted that the market for the bank debt has been improving. A spokeswoman for the company in the U.S. did not return calls.

Catholic Healthcare West, a not-for-profit healthcare provider, has renewed a $350 million credit line via lead bank, Bank of America. The credit includes a $175 million, 364-day revolver and a $175 million, two-year letter of credit facility. The letter of credit facility is posted as collateral for Catholic Healthcare's workers compensation, self-insurance program, explained Bill Baird, the company's assistant treasurer. The beneficiary of the collateral is California's self-insurance program. The only outstanding amount on the revolver, meanwhile, is $55 million. Catholic Healthcare drew down on the facility to bridge the time between the maturity of a private-placement issue and the completion of a new issue via B of A, expected in June or July.

Charter Communications' "B" loan traded up last week as the company prepared to come to market with an amendment that will allow its principal owner, Paul Allen, to provide a $300 million back-up credit. Pieces of the "B" loan traded into the 92-93 range from the 91 context with the news. The amendment will ask lenders to allow the back-up credit a second-lien security on some of the company assets. Moreover, the amendment will provide a 50 basis point increase to the interest rate provided on the "B" piece, pushing up the spread over LIBOR to 23/4%. The extra coupon was the main cause in the higher trading price of Charter's loan, noted one buysider. There were also rumors that some kind of debt-to-equity swap may be ahead for the company. The bank meeting to introduce the amendment was set to be held last Friday as LMW went to press. A Charter spokesman said no announcements had been made and the company does not comment on rumor or speculation.

Colfax Corp.'s competitive and fragmented market is a primary credit concern for Moody's Investors Service, said Charles Tan, v.p. and senior analyst. The fluid handling and power transmission product maker has considerable exposure to cyclical end-markets and is a relatively small entity in the highly competitive pump and power transmission industries, Moody's states. Moody's assigned a Ba3 rating to the proposed $315 million credit's $50 million revolver and $225 million "B" term loan, while the $40 million second lien "C" piece received a B1 rating. The facility backs Colfax's acquisition plans for German-based pump producer Netzsch Group for $113.4 million and will also refinance $145.1 million in existing debt.

With downgrades mounting in the CDO markets last year, investors were seeing an increase in features designed to provide early intervention in the case of portfolio deterioration and address the problem of abusive manager strategies. Danielle Nazarian, v.p. and senior credit officer at Moody's Investors Service, highlighted 11 structural protections that were either in their infancy or were becoming the standard on deals in a report that was widely acknowledged by managers and underwriters. Nazarian discusses with LMW progress made since the report was issued last summer and what more to expect in terms of structural enhancements.