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Merrill Lynch's move last week to cut three veterans from its loan group has many players questioning the investment bank's commitment to the loan market. "There is no more loan business there; it's as simple as that," one rival banker said of the investment bank's decision to let go of Harold Siegel, Amy Miller andNeil Brisson. "These people are good, and it makes no sense to cut them and not everybody." Other rivals, however, see the move as a vital cost-cutting measure and believe Merrill is in it for the long run, albeit with a slimmed-down crew during the currently lean M&A period. A Merrill spokesman confirmed that Wednesday was the last day for Siegel, Miller and Brisson (LMW Web site, 10/23). He would not comment on Merrill's commitment to the syndicated loan market.

cStatic pools remain the domain of the credit derivatives desk headed by Boaz Weinstein. Zeitlin's new group creates a CDO platform that centralizes all managed deals, whether synthetic or cash flow, for all asset classes. As of last Thursday, staffers were still awaiting an internal memo on the matter. Ted Meyer, a spokesman at Deutsche Bank, referred calls to Zeitlin who did respond.

Deutsche Bank and Credit Suisse First Boston will launch the bank meeting for Rexnord Holdings this Thursday. The $435 million bank deal backs The Carlyle Group's acquisition of Rexnord from Invensys for $913 million. The bank debt is split between a six-year, $75 million revolver and a seven-year, $360 million term loan, a banker said. Pricing has not yet been set on the deal, and officials at the banks did not return calls.

Last week, the Loan Syndications and Trading Associationheld its seventh annual conference at the Hilton New York Hotel. Highlights included discussions on the link between default and recovery rates, distressed settlement and the risk associated with private information. The staff of LMW was on hand and filed the following stories.

Andrew Weber has joined Deutsche Bank's collateralized debt obligation structuring group from J.P. Morgan Securities. He will report to Anand Parekh, who heads the group out of New York. Weber was unavailable for comment. Ted Meyer, a spokesman at Deutsche Bank, declined to elaborate.

A group of AT&T bondholders is up in arms over the terms of an $11.76 billion debt exchange set to close this Friday. Some investors are complaining that they're being short-changed, but most investors are resigned to go along with the deal anyway, say buy- and sell-side officials. A banker close to AT&T says the company will not negotiate the terms of the deal. He advises bondholders to accept the offer on the table, arguing that the bonds currently trade at a higher price than if there was no exchange.

Ball Corp. last week postponed the bank meeting for a $1.6 billion financing package backing its $880 million acquisition of Schmalbach-Lubeca, and instead will try to get the deal rolling this Wednesday. Raymond Seabrook, cfo, said the company has been juggling structures on the new deal and shuttling back and forth from meeting with Schmalbach management in Germany.

The $30 million piece of Conseco's bank debt that had been shopped two weeks ago finally traded around the 57 level last Tuesday as the company announced that it would put its finance division up for sale. The buyer and seller of the large piece could not be determined.

Banc of America Securities has hired Brian Edmonds to head up its Treasury trading desk. Edmonds, who will also be responsible for trading the benchmark 10-year sector and will be based in New York, says he will have about 10 Treasury traders reporting to him. He reports to government securities boss Kurt Harrison. Prior to joining B of A, he had been a co-head of Treasury trading at Credit Suisse First Boston, where he ran the desk for several years with Pat Haskell. Before CSFB, he worked at Lehman Brothers with Harrison. He left CSFB about six months ago, according to CSFB spokesman John Gallagher.

Private-equity firms TA Associates and Friedman, Fleischer & Lowe have tapped GE Capital for a $170 million credit facility to back their $350 million acquisition of Tempur World, a maker of foam mattresses and pillows. The purchase occurs against the backdrop of a busy leveraged buyout scene, as well as a tough high-yield financing market, according to Andy McLane, a senior managing director at TA Associates. "Most of our larger buyouts are structured with equity, sub debt and senior debt," McLane said. "But [the high-yield] market is not open right now," he added, explaining why the bank loan market primarily was tapped to fund the acquisition.

Investors are pushing for a price hike to LIBOR plus 41/ 4% on the institutional tranche of Dex Media East, on top of a previous 1/2% flex to LIBOR plus 4%. "Investors expect to see a flex to compensate for all the directory paper," one banker said, noting that the credit also has call protection at 102 and 101 for the first two years and is being sold at a discount of 99. J.P. Morgan has told some bankers that the $700 million "B" piece is already full, but others say it is more like two-thirds complete. The sub-underwriting phase already has snagged ING Capital, Bear Stearns, Royal Bank of Scotland, Scotia Capital, Credit Lyonnais and Commerzbank (LMW, 10/14). Bankers at J.P. Morgan did not return calls.

Collateralized debt obligation dealers are scrambling to restructure new deals by enhancing protection and possibly excluding junk note tranches altogether in an effort to appease finicky mezzanine investors. The unprecedented amounts of corporate downgrades and defaults are making mezzanine notes the toughest pieces of a deal to sell, CDO structurers say. Mezzanine tranches are the triple-B or double-B rated notes between the equity piece and the senior tranches. They do not have the upside return potential of the equity while taking on first losses as the bottom debt tranche. "It is a hard sale to place the mezzanine piece," admits Russell Hurst, director structured debt research at Banc One Capital Markets.