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Insight Investment, which manages £25 billion in global government bonds, has been buying long-dated U.S. Treasuries in the 10- to 30-year sector. The firm has allocated roughly 5% of its global fixed-income assets to this trade. As a sterling investor, Treasuries offer good value because they are high yielding and the manager can hedge the currency risk cheaply as the dollar continues to be weak versus the pound, says Chris Hartley, London-based director of fixed income. Hartley says the hedge has been working because the forward foreign exchange rate is at a better rate for the sterling investor than the spot rate. The firm has been using this strategy, although on a smaller scale, in the European sovereign bond market.

More than $20 million of Federal-Mogul's bank debt changed hands last week, rising up from the mid-to-low 60s into the 67 1/2 to 68 1/2 range on hopes that a resolution to the company's bankruptcy proceedings will be hammered out soon. The paper climbed after the Official Committee of Unsecured Creditors and the Official Committee of Asbestos Claimants filed a motion to terminate Federal-Mogul's exclusive right to file a plan of reorganization. "Serious negotiations are going on," said Michael Lynch, Federal Mogul cfo. "It's a sign that the process is proceeding," he added, declining to comment further citing the private nature of the negotiations. The hearing to discuss this motion will be held on Jan. 29.

Fort Washington Investment Advisors will look to add to its triple-B corporate holdings in a bid to pick up yield as the economy shows signs of improving. Tim Policinski, portfolio manager of $1.6 billion in total return portfolios, says the firm will increase its triple-B allocation by up to $40 million in the next quarter or two, trading out of Treasuries across the yield curve. The main trigger for the trade would be a resolution of the Iraq conflict, Policinski says.

Exide Technologies' bank debt has been fairly active the last couple of weeks with chunks trading in the 59-61 context. Last week a small piece, which traders classified as less than $4 million, was auctioned off in the 61 range. A foreign bank was the seller, but the buyer could not be determined. Two weeks ago, some $10.6 million traded out of the hands of an original lender. The trade was completed in the 59-60 context. The paper has been climbing up from the low 50s, but the reason for the bounce could not be determined. Recently the company hired Biagio Vignolo, Jr. to be its new CFO. Vignolo could not be reached by press time.

Investors piled into Nexstar Broadcasting Group's $175 million "B" piece, led byBank of America and Bear Stearns, oversubscribing the tranche a day after its Jan. 14 bank meeting. Robert Thomson, cfo, said the tranche was oversubscribed by three times. Pricing is LIBOR plus 31/ 2% on the institutional piece, while the $80 million revolver priced at LIBOR plus 31/ 4%. The lead banks and Thomson are uncertain if they will increase the capacity or flex pricing on the tranche. Leverage multiples out of the gate were six times, according to 2002 figures, a banker noted. Thomson referred further questions to a B of A banker who declined to comment. A Bear Stearns official also declined comment.

Small pieces of Charter Communications traded down in the 85 1/8 to 85 1/2 range after Moody's Investors Service downgraded the bank debt from B1 to B2. The report cited the need for the company to restructure in the near-to-intermediate term. "They are basically going to run out of time," said Russell Solomon, Moody's analyst. "The ultimate problem is that cash flows didn't grow in accordance with expectations," he said. Solomon explained that debt service, now more than $1 billion a year, has become too high in comparison.

The oil workers' strike in Venezuela has caused Fitch Ratings to lower CITGO Petroleum's senior unsecured debt rating from BBB- to BB- due to severe disruption of the country's oil exports. CITGO has been forced to find alternate sources for much of the crude oil usually supplied by Petroleos de Venezuela S.A. (PDVSA), the state-owned oil company of Venezuela and an indirect parent of CITGO. CITGO usually purchases 50% of its crude from PDVSA and has successfully acquired other crude sources throughout the strike.

WEEKLY UPDATE

Credit Suisse First Boston has hired Jerry Wood, managing director in fixed income and 20-year veteran of Morgan Stanley in New York, to work in a senior position in the firm's bond division, according to BW sister publication Derivatives Week. Officials familiar with the situation noted that Wood is close to CSFB's CEO, John Mack, having worked with him at Morgan Stanley, arguing that the hire reflects Mack's continuing effort to fill senior positions with loyal lieutenants. Wood didn't return calls. Mack's secretary referred calls to Cristina von Bargen, spokeswoman, who declined comment.

CSX Lines' control over a large portion of the U.S. flag vessel market gives strength to the company's $200 million credit facility, which backs The Carlyle Group's acquisition of the ocean-liner operator from parent company CSX Corp. U.S. Flag vessels are ships owned, manned and built by the U.S. Under the Jones Act, only these vessels can transport cargo between U.S. ports. The limited competition allows CSX Lines to hold a 37% market share in its major trade routes from the mainland U.S. to Puerto Rico, Hawaii, Guam and Alaska, explained David Berge, a Moody's Investors Service analyst. The rating agency has assigned a Ba3 rating to the credit.

London-based securitization syndicate bankers say timing deals is key this year if the market is to avoid the bottleneck of issuance seen in the fourth quarter, which significantly softened spreads. "In general, we're going to have to be more clever about timing. The fourth quarter saw spreads becoming soft under the weight of new issuance," says Nick Morgan, head of ABS and CDO syndicate at Dresdner Kleinwort Wasserstein in London. "There were too many deals and too many balance sheet deals. Pricing got soft, more so than in previous years," he adds.