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Roughly $30 million of El Paso Corp. bank debt is rumored to have traded in two pieces last week out of the same commercial bank. The trades went off in the 85 range, according to market players. El Paso's bank debt initially plunged from the 90s after the Federal Energy Regulatory Commission disclosed that the company's pipeline subsidiary would be held responsible for withholding capacity from California during the state's 2000/2001 energy crisis (LMW, 9/30). Dwight Scott, El Paso cfo, could not be reached by press time. The bank responsible for the trades could not be determined.

Recent downgrades and investigations into trading activities of El Paso Corp. (Ba2/BB) have created a quandary for holders of the roughly $800 million in bonds issued by El Paso Limited Energy Partners (EPN). Financially troubled El Paso Corp. is a general partner with a 42% stake in EPN (B1/BB+). When El Paso was an investment-grade credit, it was seen as a possible boon to EPN bondholders, but since it has fallen to junk some fear an El Paso bankruptcy could drag EPN down with it. Standard & Poor's recently issued a report saying the two entities are "tethered," and put the partnership on creditwatch for a potential downgrade, and the EPN bonds traded down as a result. However, at least two sell-side analysts and one buy-sider say the entities are entirely separate and the EPN bonds are cheap. If the latter group is correct, they stand to make substantial gains, as spreads have widened some 200 basis points or more on several issues.

Four Corners Capital Management, the asset management company headed by loan veteran Michael McAdams, has been forced to put its debut collateralized loan obligation Mondrian CDO I on the backburner after failing to raise the debt for the vehicle. The event is surprising to many loan players as McAdams, president and chief investment officer of Four Corners, is considered to be an institution in the loan market and other firms have been raising debt successfully in the last few weeks. Four Corners is staffed primarily with ex-ING Capital Advisors people, with most individuals having been involved in at least 14 deals. McAdams did not return repeated calls for comment.

Zais Group originated its second collateralized debt obligation of CDOs of the year. Called Zing V, the $400 million transaction was underwritten by Deutsche Bank. The deal, which is backed almost entirely by other CDOs, is set to close Thursday. Calls to the syndicate desk at Deutsche Bank were not returned by press time last Thursday. Christian Zugel, president of the Red Bank, N.J.-based asset management firm, declined to comment. Zais is a collateral manager that specializes in CDOs of CDOs and is said to have launched the first deal of this type with its Zing I transaction in 1999.

London & Continental Railways Ltd. has put a £1.6 billion securitization of track access fees out to bid to investment banks, say industry officials. The rail company operates the high-speed rail link between the Channel Tunnel and Central London. This deal will be the company's fourth.

Soon-to-be-passed legislation in Italy will make it possible to execute whole business securitizations and, accordingly, investment banks are getting equipped to start structuring deals. Market experts expect the specially designed legislation to be enacted next year and are bullish on the prospect for deals. "Money costs more for Italian corporate bond issuers, because banks are less willing to lend," says Marco Grimaldi, a securitization banker at Dresdner Kleinwort Wasserstein in London. Grimaldi says "ring-fencing" operating assets with a steady cash flow and borrowing against them makes economic sense for Italian corporations.

Koppers Industries could be downgraded by Moody's Investors Service because of earnings and cash flow pressures confronting the Pittsburgh-based company. These pressures have been caused by the extended downturn in North American aluminum and steel markets, the imminent expiration of tax credits and uncertainty surrounding the recently announced investigation led by the European Union and the U.S. Department of Justice related to competitive practices. The credit facility, which includes a $100 million revolver, a $9.7 million "A" loan and $43 million "B" loan is rated Ba2. Moody's has changed the outlook to negative from stable.

The Aerostructures Corp. has landed a new $165 million credit despite tough times for the aerospace industry and tight credit markets. The company needed the new facility in anticipation of an upcoming March 2003 maturity on its existing $75 million revolver, said Dev Kapadia, a principal at The Carlyle Management Group, which owns Aerostructures. The new loan did not come without concessions, however, as the pricing on the deal was flexed up 50 basis points during syndication on both the revolver and institutional tranches.

A $30 million piece of AES Corp. traded out of the hands of a commercial bank recently as a few lenders refused to sign on to a refinancing deal that needed 100% lender approval. The bank that sold the paper was said to have wanted to reduce its large position in the name and was not one of the lenders holding out. Some market players suggested the bank sold out of the name to prepare its books for the year's end.

The collapse of EchoStar Communications' bid for Hughes Electronics gives investors a chance to make total return gains in the satellite sector, according to a buy- and sell-side analyst. However, they disagree on which credits stand to benefit the most.

Bear Stearns Merchant Banking also scored a $120 million senior credit facility along with $67 million in subordinated mezzanine debt to back its acquisition of Vitamin Shoppe, with Bear Stearns and BNP Paribas providing the line. "Bear's syndication group stepped up more quickly than anyone else in a very tight frame in a competitive auction process, and BNP joined as co-lead because they knew the company," said Richard Perkal, senior managing director at the Bear Stearns buyout arm, adding that BNP has lent to the vitamin industry before.

Scotia Capital, Salomon Smith Barney and Bank of America launched syndication of an $800 million refinancing credit for Levi Strauss & Co. last Wednesday. Pricing is LIBOR plus 33/ 4% on the $400 million revolver and LIBOR plus 4% on the "B" term loan, according to a banker familiar with the credit. Levi Strauss currently has a $1.05 billion facility with the three banks that matures in August of 2003. Credit Suisse First Boston, Fleet Boston Financial and J.P. Morgan have committed to the revolver. A B of A official declined to comment while officials at Salomon and Scotia did not return calls.