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Congratulations to Ben Lloyd at Barclays Capital and Richard Cameron at PB Capital for completing the New York City marathon on Nov. 3. But there were probably other loan market players picking 'em up and putting 'em down in the big race. Send official chip times to ppaulden@iinews.com, and the fastest runner over the 26.2 miles will receive a prize courtesy of LMW.

Mitch Stapley, portfolio manager at Fifth Third Investment, will rotate $200 million, or 5% of the firm's portfolio, from agencies into Treasuries to take advantage of the recent softening of Treasury prices generated by the rebound of the stock market. An indication of this trend, he says, is the recent increase in the 10-year Treasury yield from its 3.55% low on Oct. 9 to 4.04% last Monday. He argues that last week's Treasury auction will continue to back up the 10-year Treasury's yield as the market copes with the new supply. A trigger for his move would be when the 10-year benchmark reaches a 4.25% yield, he says.

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 Life Investments plans to extend the risk profile of its E16 billion corporate bond portfolio. Andrew Sutherland, investment director for credit at the Edinburgh-based manager, says he will wait for signs that general market volatility has abated and stabilized before making any move. He will reinvest in triple-B rated corporate credits once a number of factors become apparent.

Bailard, Biehl & Kaiser is looking to buy short-term Ford Motor Credit debt in a bid to pick up yield and limit interest rate risk. Eric Leve, portfolio manager of some $120 million in taxable fixed-income, expected to be in the market buying the paper last week. As a trigger for the trade, he had been waiting to see stronger factory orders, which in fact proved to be down when they were released last week after Leve outlined his strategy to BW. Leve hoped stronger manufacturing numbers would indicate that the economy was turning, which he said would drive up the two- to 10-year "belly" of the Treasury curve. The Ford 6.125% notes of '03 (A3/BBB) were trading at 354 basis points over Treasuries last Monday. Leve says he might look to sell the Pfizer 5.625% notes of '06 (Aaa/AAA), which were trading at just 56 basis points over the curve. Leve expects to buy $2.5 million overall in Ford and possibly other triple-B names in two- to five-year maturities, trading out of higher-rated names to pick up yield and maintain low duration.

The decision by the Federal Reserve to cut interest rates by one-half of a percent to 1.25% may have been greeted by the wider market as a welcome boost, but it is another kick in the face to the long-suffering prime-rate funds. The net asset value of the funds has fallen from a peak of $30.6 billion in 1999 to $17 billion as of September, and the prime-rate funds now only contribute 10-20% of total fund flows to the high-yield loan market, according to data fromBanc of America Securities. Furthermore, the effects of the current environment are starting to take a more drastic toll.

Prudential Capital Group is in the market trying to raise debt for a new $305 million collateralized loan obligation named Dryden 2002-3, joining a growing pipeline of potential new deals. But the conditions for selling the senior and mezzanine tranches are in stark contrast from earlier this year, when Prudential last priced a deal, said a banker. The spread on the triple-A tranche for Dryden Leveraged Loan CDO, which priced in July, is LIBOR plus 43 basis points (LMW, 7/14), a level far tighter than current price talk. In addition to a widening of spreads on the senior notes, a banker noted that a number of deals in the pipeline are struggling to raise the mezzanine and equity portions, although he declined to specify which ones.

Baar, Switzerland-based Glencore International, one of the world's largest natural resources companies and commodity traders, is preparing a rare securitization of its commodity inventories through a single-seller commercial paper conduit, according to Seth Vance, managing director, head of financial institution securitization and European collateralized debt obligations at Deutsche Bank in London. The $750 million deal, scheduled to be launched next month, is being structured and lead managed by Deutsche Bank's London-based securitization team.

A high-yield gaming and leisure analyst is recommending Royal Caribbean's bonds to investors looking to pick up additional yield versus the tight-trading gaming sector. John Maxwell, head of high-yield research at BNP Paribas, says the cruise operator is seeing a continued rebound in spite of the soft economy, as it recovers from last year's Sept. 11-related woes.

Standard & Poor's has assigned a preliminary BB- rating to Constar International's $250 million credit facility, which backs the beverage container company's spin-off from Crown Cork & Seal. Constar's total pro-forma debt is about four times EBITDA, although that ratio is expected to improve to 3.5 times. "Compared to the most aggressive companies, it's not a bad starting point given leverage," said Kyle Loughlin, director and analyst at S&P. Still, the distressed enterprise value may not offer lenders a full recovery in a default scenario.