Search results for

Chris Neuharth, portfolio manager at U.S. Bank Corp. Asset Management, says he is considering moving $80 million, or 2% of the firm's portfolio, from Treasuries into corporates. He reasons that corporate bonds should perform well over the next year, after the economy fully recovers. There is no particular trigger for this move besides the assumption that the macroeconomic environment has stabilized and that the risk of a double dip recession is reduced, says Neuharth. However, should the stock market enter a new phase of high volatility and sharp price declines, the firm would postpone the move, he cautions.

Deutsche Bank and Wells Fargo Bank have fattened pricing and added tranches to their $265 million credit for Veritas DGC. The company, a close cousin to the energy sector, could not disguise its bloodline and met with resistance from investors. "The 'B' guys wanted the changes," said a banker familiar with the deal. "The market didn't like the way it was structured." He noted the lead arrangers had to answer concerns about the credit's collateral with a new structure. A Deutsche Bank official declined to comment, while a Wells Fargo official could not be reached by press time. "I don't think the changes were that radical," said Matthew Fitzgerald, cfo of Veritas. He explained that some of the banks wanted a subordinated piece, while some investors wanted a higher yield. "It was to provide additional flexibility for every type of investor," he added.

So we've heard of the curse of the mummy's tomb and even the Sports Illustrated curse but could there be a stadium-naming curse? This week, when Conseco filed for bankruptcy not only did it join the ranks of over-leveraged defaulted companies, but it also became one of the bankrupt companies with a stadium bearing its name. The Conseco Fieldhouse, home of the Indiana Pacers, joins a list that includes the Tennessee Titans' Adelphia Coliseum, the Houston Astros' Enron Field, and the Washington Wizards' MCI Centre.

National City Investment Management is looking to add some 5%, or $250 million, in corporate bond exposure throughout its various portfolios. Cindy Cole, senior portfolio manager of $5 billion in taxable fixed-income, sees corporates benefiting from what she believes will be a slow recovery, driving the 10-year to 5% or higher by the end of 2003. The firm will sell U.S. government securities to raise money for the purchases. Cole says National City will look for a period of weakness in the first quarter, as concerns about war or the overall health of the economy may return, to add further exposure.

Principal Global Advisors is adding to its already overweight allocation in mortgage-and asset-backed securities on the view that the economic recovery will be slow, says portfolio manager Marty Schafer. Schafer, who oversees $7 billion in assets, says purchases for the portfolio's core overweight in MBS pass-throughs and ABS will be made primarily on "short-term sell-offs." His affection for MBS is predicated upon what he says is the sector's low volatility, high-liquidity and excellent carry. Moreover, he adds that "the GSE's are continuing to grow and banks are continuing to add to their retained portfolio's--there isn't a coupon that isn't well-bid or a [dollar] roll that isn't at fail." In respect to ABS, Schafer says he will continue to buy triple-A "major issuer" credit card and auto-receivable paper "on every dip." He declined to name specific issuers, noting, "I'll buy them all, since my only real risk is in short-term price swings."

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.

Standard & Poor's has recognized AES Corp.'s efforts to push out its significant maturities by taking the company off credit watch, though still with negative implications. The company recently completed a balance sheet overhaul, which included a bank loan refinancing and a note exchange, and lifted the immediate threat for insolvency, noted the rating agency. S&P has affirmed the company's BB rating on its $1.62 billion credit facility and its B+ corporate credit rating.

Ares Leveraged Investment Fund, a market value collateralized debt obligation managed by Ares Management, has been upgraded by Fitch Ratings, bringing two of its tranches back to its original ratings. The move comes on the heels of better-than-expected performance and a waiver on outstanding debt. The market value fund was downgraded by Fitch in October last year following a significant decline in the value of the assets, causing failure in the quarterly minimum net worth tests and over-collateralization tests, according to Fitch. David Sachs, a portfolio manager with Ares, did not return calls.

Prudential M&G, a subsidiary of Prudential based in Europe, also scored with its first ever purely European collateralized loan obligation. The $308 million deal called Leopard CLO I consists of a revolving pool of senior loans, mezzanine loans and synthetic securities, said an analyst. The European leveraged loan market is seen to be catching up to the U.S., with the poor performance of bond deals encouraging managers and investors to turn to loans (LMW, 11/18). Credit Suisse First Boston underwrote the notes.

A class of notes for Smoky River CDO, a RBC Leveraged Capital collateralized loan obligation that was previously managed by Indosuez Capital and called Indosuez Capital Funding IV, has been placed on watch for possible downgrade by Moody's Investors Service. RBC Leveraged Capital was formed by ex-Indosuez staff last year, including Daniel Smith now head of CDO asset management at RBC. Shortly afterwards, investors voted to switch management on the $1.3 billion CLO. Smith declined comment on the situation.

Société Générale has fully underwritten a $180 million credit for the Boston Celtics Limited Partnership, backing the acquisition of the basketball team by Boston Basketball Partners, a local private investment group. The credit consists of a $100 million secured term loan at the team level and an $80 million unsecured term loan at the holding company level. The National Basketball Association has a debt cap of $100 million, explained a banker familiar with the deal, which is why the line is split into two loans. The team loan is priced at LIBOR plus 11Ž 2%, while the holding company loan has a LIBOR plus 21Ž 2% spread, the banker noted. An SG official declined to comment.