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Richardson Electronics has negotiated a $102 million credit with leverage and coverage ratio covenants more relaxed than those in its previous $108 million line. Previous covenants did not allow leverage to exceed 3.5 times for the LaFox, Ill.-based company, explained Dario Sacomani, v.p. and cfo. That cap has been removed in response to the uncertain economy and instead the company will pay up on a leverage-based grid. "It's new because of the incremental operating flexibility in respect to the new covenants," Sacomani stated, also explaining that the line is an extension of the previous revolver. The credit maturity has been extended 15 months to September 2005.

Xerion Capital Partners, a distressed investment firm set up by Daniel Arbess, a founder and ex-head of special situations investments at New York-based Triton Partners, will begin to buy assets in the coming weeks. "Our immediate focus will be on mid-cap businesses struggling with excessive leverage and possibly facing, undergoing or emerging from recapitalization or reorganization," said Arbess.

The Andersons, a regional grain merchandiser, has secured its first-ever syndicated loan, selecting U.S. Bank to be lead arranger for the $200 million line. The company opted to roll its bilateral deals into one line after the complexity of working with six different law firms representing six different banks and their unique documentation got to be too much, commented Gary Smith, v.p. of finance and treasurer of Andersons. "The syndication approach got it all under one umbrella," he said.

More hedge funds are looking to capitalize on the economics of buying unfunded revolvers trading at a discount, and some market players are raising concerns over the increasing counterparty risk involved with assigning unfunded loans to these unregulated entities. Banks are among those concerned as they question whether or not these funds will have the appropriate capital to back up a potential drawdown. "Because they are not regulated no one is really sure about how creditworthy these hedge funds are," noted one dealer.

Goldman Sachs, CIBC World Markets, and Deutsche Bank are launching retail syndication this month of Thomas H. Lee and Bain Capital's $725 million credit backing the $1.66 billion purchase of Boston-based Houghton-Mifflin from Vivendi Universal. The deal, which launched to managing agents last month, could face problems due to high leverage, bankers stated. However, other bankers said they were expecting the credit for the textbook publishing company to be met with a good reception. A Goldman official and a Deutsche Bank spokesman declined to comment, while a CIBC banker did not return calls.

J.P. Morgan and Bear Stearns are meeting this week to launch a refinancing and an add-on institutional piece for publishing house American Media (AMI), an Evercore Partners portfolio company. The bank debt, along with a bond deal, will back AMI's acquisition of Los Angeles-based Weider Publications for $350 million, which represents a price 12.7 times Weider's cash flow. The transaction is expected to close this quarter. A J.P. Morgan spokesman declined to comment, while a Bear Stearns banker did not return calls by press time.

Octagon Credit Investors, the leveraged loan and high-yield manager subsidiary of J.P. Morgan Partners, is ramping up assets for a new $300 million collateralized loan obligation called Octagon V. Octagon waited until the end of the year before attempting to price. "The credit environment became more compelling," said an official familiar with the deal. The vehicle is structured to have up to 90% loans and 10% bonds and is approximately two-thirds done, he said. J.P. Morgan priced the notes. Officials at Octagon and a spokesman for J.P. Morgan could not be reached by press time.

It calls itself the American Dream business. Fannie Mae is the largest source of financing for home mortgages in the US, and since its creation as a government agency in 1938 has helped finance the homes of millions of Americans; today 19 million American families live in homes financed in part by the company. Last year it purchased or guaranteed US$615 billion of home mortgages; it has US$838 billion in assets and guarantees, another US$990 million in mortgage-backed securities, and is arguably the largest issuer of debt worldwide after the US Treasury. So a behemoth like this shouldn't care about Asia, should it? Well, apparently it does. At the end of October a team including its chairman and CEO, Franklin Raines, and treasurer Linda Knight, chose Hong Kong as the venue to announce Fannie Mae's benchmark calendar for 2003. Fannie Mae's Benchmark Securities – we wouldn't normally capitalize it, but they've taken out a trademark on the name so it seems to warrant a certain gravitas – offers large issues of callable and non-callable debt offerings designed to give investors strong and predictable liquidity, regularity and credit quality. New issue maturities between two and 10 years have a minimum size of US$4 billion, often followed by reopenings. In 2001, Fannie Mae issued US$84.75 billion of non-callable benchmark notes and bonds. The reason Raines picked Hong Kong, amid a frantic four-day investor relations tour that also took in Singapore, Beijing and Tokyo, is to acknowledge the role Asian investors play in these securities. (This was the company's 18th annual visit to the region, a trip that would hit up to 200 potential buyers.) Asian investors account for 14% of investors in benchmark notes and bonds.

Debt avalanche for Korea

After seven years of protracted negotiations, the terms of the Phu My 2.2 gas project in Vietnam are complete. The deal, which set political, financial and legal precedents, was tough going for all concerned. Fiona Haddock reports.

Analysts and investors gripe about New World Development, seeing it as untransparent, debt-laden and confusing. A recent restructuring of the group, apparently accompanied by a new spirit of openness, addresses some, but not all, of these concerns. How far does it go? By Chris Wright.

Risk – financial and physical – has shot into the consciousness of companies around the globe. Fiona Haddock gauges the response of some of Asia's top corporates, from India's Infosys to China's CNOOC, to a whole new portfolio of unknowns.