Search results for

Chandler Asset Management is looking to shift some $20 million of its short-term U.S. agency holdings to a "butterfly" position--selling three-year debentures in favor of 1.5- and 4.5-year paper.Joe McCullough, portfolio manager of $1.3 billion in taxable fixed income, says the three-year part of the curve has often been expensive relative to 1.5- and 4.5-year maturities, and the firm will make such a "butterfly" trade in those instances. Chandler will also move $20 million out of U.S. agency debentures and into corporate credit. McCullough says the firm wants to pick up yield and position itself for an economy that is expected to improve.

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.

Bonnie Mitra, portfolio manager at AMR Investment Services, will rotate 8% of the firm's portfolio, or $400 million, from mortgage-backed securities into an equal mix of agencies and high-quality corporates. The move, not triggered by any particular event, is a defensive play in anticipation of rising interest rates that adversely affects extension-risk sensitive MBS, says Mitra. He predicts higher interest rates by year-end as a result of an economic recovery stimulated by a fiscal package. He also sees an end to the Treasury rally once the uncertainty over a war with Iraq is lifted and the conflict resolved. By the end of the year, the 10-year Treasury yield will increase to a 4.5-5% range, he predicts. Last Monday, the 10-year Treasury yielded 3.95%.

Investec Asset Management, a U.K. fund manager with $8.5 billion in fixed-income assets under management, has lengthened duration on its portfolios. Geoff Lunt, a London-based fund manager, says, "It's been our view for a long time that the global political situation is going to get worse, and that is indeed what has been the case over the past week. The consensus is that [U.K.] interest rates are likely going to be cut, and obviously bonds will have a premium."

Merrill Lynch has hired Alan Galishoff from J.P. Morgan Securities to head up a nascent mortgage-backed securities proprietary trading effort, a move first reported last Tuesday on www.bondweek.com. Galishoff could not be reached for comment last Tuesday morning, with a co-worker saying he had already left the firm. He had been head of J.P. Morgan's collateralized mortgage obligation and MBS derivative effort since early 2000. He will report to Merrill's global rates group co-head Barry Wittlin. Wittlin did not return a phone call seeking comment, nor did he reply to an e-mail message. It could not be determined if Galishoff will be the sole MBS arbitrage trader there or if he will be part of a larger group.

A group of bondholders holding over 65% of a $950 million issue by Millicom International Cellular has hired counsel and a financial advisor, and plans to reject an exchange offer made by the company on Jan. 21. "It's very far removed from anything that would be remotely acceptable in terms of proper allocation of value," says Tony Princi, partner at Orrick, Herrington & Sutcliffe, counsel for the bondholders.

Morgan Stanley is putting together a French commercial mortgage-backed securitization that should be coming to market in the coming weeks, according to London-based bankers. The deal, which will be E340 million and securitize a single property loan in France, is Morgan Stanley's 14th through its European Loan Conduit program (ELOC). Calls to Morgan Stanley seeking comment were not returned.

Greg Coules has joined J.P. Morgan Securities in a newly created position as a v.p. and distressed loan analyst, according to sell-side officials with knowledge of the hire. Coules was one of a number of high-yield professionals released from Morgan Stanley in November. He had spent three years at Morgan Stanley covering the broadcasting sector. Coules declined comment when reached at J.P. Morgan. He will report to Eric Rosen, managing director and head of the loan-trading group. Rosen also declined comment.

Standard & Poor's lowered the corporate credit rating of Pegasus Communications' and its related entities' from B to CCC+, as liquidity pressures subsist against an approximate $1.3 billion total debt load. Factors such as unfavorable subscriber growth trends and an unclear view of long-term business success reflect the new rating. S&P also states that approaching maturities and limited access to capital augment the near-term financial risks. Aggressive, debt-financed DirecTV rural franchise and heavy subscriber acquisition activity also contributes to thin interest coverage, cash flow deficits and significant capital requirements.

Bear Stearns and Merrill Lynch have raised $400 million of Penn National Gaming's $600 million "B" piece after its institutional debut on Jan. 23. Some investors were said to be waiting last week on PresidentGeorge Bush's State of the Union Address to consider any bids into the credit. However, another banker said this had minimal impact on the deal. Both big and small tickets have rolled into the loan since its retail launch, the banker said. The $800 million acquisition credit's "B" piece is priced at LIBOR plus 31/ 2% with a 1/8 % upfront fee. The lead banks do not expect any concessions at this point, the banker said, adding that the deadline is Feb. 10.

Sanmina-SCI Corp. sealed a $275 million "B" loan that was oversubscribed by more than three times as part of its $1.025 billion initiative to refinance and pay down debt. The loan closed in conjunction with a $750 million 103/ 8%, seven-year, senior secured note offering. Both the term loan and the notes were upped from their initially proposed amounts. The loan increased by $25 million, while the notes were boosted by $300 million. Sanmina was pleased with the timing of the transaction and the final terms, said Rick Ackel, executive v.p. of finance and cfo.