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The bank debt of Express Scripts traded at 99 in the Street, following reports that Aetna will be terminating its pharmacy contract with the company. The paper had been trading in the 99 3/4 context prior to the news, and it had even rallied a bit immediately following the trade. But by week's end, the market for the name had slipped into the 98 1/2 99 range.

FMC Corporation has secured a $500 million credit facility that includes the company's first-ever "B" term loan. According to Eric Norris, director of investor relations, the Philadelphia chemical company decided to tap the institutional market for additional lending flexibility. "[An institutional loan] is a very viable source of capital for us," Norris said, explaining that the term loan provided the company with the additional capacity it needed. He further noted that an institutional lender is a "harder sell" than a relationship bank. "The term loan folks are much more nuts-and-bolts, dollars-and-cents oriented," he added. However, he affirmed that FMC was pleased with the final outcome of the deal, particularly considering the currently difficult credit market.

Tyco International's February 2003 bank debt was stronger last week, with pieces trading in the 96-96 1/2 context. The paper rallied along with its stock despite reports that the company would have to restate three quarters worth of earnings. Some market players noted that some restatement was expected and that it wasn't as bad as people thought it could get. "If you read the news, it was actually a positive even though the headline sounded really bad," one market player said. Calls to Tyco were not returned by press time.

Touching upon a subject that, in the words of one portfolio manager, has the market up all night, Laura Unger, former acting chairman of theSecurities and Exchange Commission, offered a tongue-in-cheek discussion of the five basic rules for steering clear of regulation. "Sound valuation is the key to transparency, which is the key to a healthy marketplace," she said, citing valuation as the most important factor for maintaining freedom from regulation. To obtain solid valuation, Unger recommended that loan market players employ a method that is above all reproach. "You will never be criticized for marking to market," she said.

J.P. Morgan,UBS Warburg and Goldman Sachs launched the bank deal for National Waterworks into a cautious market last Thursday. The $250 million "B" term loan reportedly is priced at LIBOR plus 33/ 4%, prompting one investor to demand more juice or a discount on the B1/BB- credit. "It's asset light, a split-rated credit and there is lots of leverage on the deal," he said, noting that total leverage is about 4.9 times. Bankers at the appropriate firms did not return calls.

Xerox's bank debt saw a flurry of activity last week, surging roughly five points. One trader said the company's stronger earnings, spearheaded by $611 million in operating cash flow for the third quarter, caused the rally. Traders noted that the company's revolver was trading in the 71-73 range and its "A" term loan in the 83-85 range. Xerox's "B" piece was quoted in the mid-90s, according to LoanX.

Goldman Sachs has priced the notes for Flagship Capital Management's second collateralized loan obligation, a $400 million cash-flow arbitrage vehicle composed of Ba3/B1 loans. The vehicle, known as Flagship CLO-II, came to market now due to a combination of factors, according to a market official. "The warehoused assets are at a size where it becomes economical to price the notes," the official said, noting that the assets are now about 70% funded. It was unattractive to increase the size of warehoused assets during the summer as spreads were so tight, he explained. The equity for the deal was obtained several months ago due, in part, to a reverse inquiry from investors in Flagship's first deal, he pointed out. Flagship officials declined to comment on the vehicle, and bankers at Goldman did not return calls.

There was a slightly better tone overall in the high-yield market through last Thursday, though it was largely offset by the damage to Charter Communications. Autos were among the better-performing sectors. In the new issue market, Nevada Power priced a $250 million deal in the private market. Here is some other action.

Invesco Asset Management is readying a E2.4 billion collateral synthetic obligation (CSO). The multi-tranche transaction is exposed to credit risk from a portfolio of credit default swaps. There may be a small portion of asset-backed securities in the structure. The deal is scheduled to be priced by year-end and one banker familiar with the transactions says it should have no trouble in the market given Invesco's sterling track record. Called Lisa, the deal is being lead managed by Dresdner Kleinwort Wasserstein. This is Invesco's second collateralized deal this year.

J.P. Morgan Securities has made some sharp cuts to its U.S. and European asset-backed securities teams, according to officials familiar with the reductions. The cuts come as a result of widely publicized headcount reduction plans at the firm. Approximately 10 ABS bankers were let go in London, including two managing directors. In New York, 10 junior- and mid-level ABS bankers were let go. Included in the New York reduction was credit-card banker Giuseppe Pagano. Mike Dorfsman, a firm spokesman in New York, says J.P. Morgan "remains committed to the ABS business," and "we believe our ABS groups are now appropriately sized."

J.P. Morgan Securities released Rick Patton, a senior high-grade salesman last week, according to several sell-side salesmen at rival firms. The move was confirmed by several of Patton's sales colleagues at J.P. Morgan. Patton could not be reached, and Bryan Weadock, head of corporate bond sales at J.P. Morgan, did not return calls. The move surprised a number of salesmen, as Patton had an excellent reputation on the Street. At least two rival sales desk heads say that they will take a serious look at hiring him. One says clients called him up and told him to hire Patton, while the other fears he may be drawn into a bidding war to hire him. Patton's buy-side clients were said to have included New York Life, Alliance Capital, Weiss, Peck & Greer and Tattersall Advisory Group.

After flexing pricing upwards, Lehman Brothers has filled the book on the $130 million "B" term loan for The Aerostructures Corp. The institutional tranche initially was priced at LIBOR plus 33/ 4%, but it was finally sold at 99 with a coupon of LIBOR plus 4%. Calls to Lehman bankers were not returned by press time.