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CIBC World Markets held a bank meeting last Thursday for Integrated Defense Technologies for an amended and restated credit facility backing the $146 million acquisition of the Gaithersburg, Md., operations of BAE Systems. The existing $45 million "B" term loan will be rolled into a new $175 million tranche, one banker said. Pricing on the existing loan is LIBOR plus 23Ž 4%, but this will be hiked up to LIBOR plus 31Ž 4% once the new cash is incorporated. CIBC also leads a $40 million revolver and a $40 million "A" term loan for Integrated.

Some managers are increasing the size of the structured note buckets in their collateralized debt obligations as they look to build par and diversify, and loan managers in particular have been seen buying credit-linked notes.

CypressTree Investments, a subsidiary of Harborview Capital Management, is looking to buy assets for its Hewett's Island CDO, a collateralized loan obligation that includes a wrinkle designed to minimize ratings volatility. More than 50% of the collateral for the $255 million CLO has been bought, with the end product set to consist of about 85% senior secured loans, 15% high-yield bonds and a small portfolio of structured finance products. Repeated calls to managers at CypressTree were not returned.

A few pieces of the bank debt of Horizon Natural Resources, formerly known as AEI Resources, was said to have traded in the mid- to high 50s last week after the company revised its EBITDA guidance downward by $60-70 million for the remainder of 2002. The revision puts future covenant compliance into question, and the company therefore has admittedly begun to speak with its banks to resolve the issue. Horizon has been hurt by operating difficulties at its Evergreen mine in West Virginia and by the unavailability of Section 404 permits in certain mines in Kentucky. Michael Nemser, cfo, could not be reached by press time.

El Paso Corp.'s bank debt plunged almost 20 points last week 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. A $5-10 million trade in the 75-77 range created quite a buzz in the market as the paper had been in the 90s. Market players were taken aback by the low levels at which the trade was posted and the relative quiet surrounding the parties involved in the trade. The buyer and seller could not be determined.

Egg, the U.K.-based online bank, will come to market with its first credit card securitization in the next few months. The deal will be at least £200 million in size and will be backed by receivables from the Egg Card, says a senior securitization official. Deutsche Bank has won the mandate for the deal. Details on expected pricing and timing of the deal could not be learned by press time last Thursday. Calls to senior Deutsche Bank officials were not returned.

WestLB is ramping up its $1 billion Blue Heron Funding III collateralized debt obligation, says a CDO market participant. The collateral manager will be WestLB in New York, while the notes will be sold out of the firm's New York and London offices. Pricing is expected this week or next week, adds this official. Blue Heron I was priced last October and Blue Heron II, in March. This third series is being customized for an undisclosed European financial institution, which will buy the entire $100 million class B tranche of single-A rated notes. No price talk was available as of press time last Thursday. Tom McCaffery, regional head for global financial markets in New York, declined to comment.

ABN AMRO's retail bank is about to launch a residential mortgage-backed securitization of Dutch mortgages that will mark its first use of securitization to sell prepayment risk. The deal will be about E500 million and will feature a fixed-rated passthrough component to allow the bank to sell prepayment risk, as well as a floating rate passthrough portion. The fixed-rate passthrough structure has been little used in Europe and this deal is an attempt to resurrect a securitization method commonly used in the U.S., according to a syndicate official with intimate knowledge of the transaction.

Affiliated Computer Services (ACS) has obtained an $875 million senior unsecured revolver in order to pay off and refinance existing debt, according to Nancy Vineyard, treasurer. The new credit line repaid a $375 million bridge loan backing the company's $400 million acquisition of AFSA Data Corp. last June and refinanced its existing $450 million revolver, Vineyard said. ACS set a minimum target of $700 million for the deal, but it took an $875 million credit due to strong demand during syndication, she explained. Vineyard noted that there is still a $25 million accordion feature in place to raise the line to $900 million if needed.

Levels on Allied Waste Industries' term loan "B" fell about a point to the 97-98 range after the company pulled a proposed $250 million note offering. Proceeds from the sale had been earmarked to pay down the company's term loans on a pro-rata basis. Traders said the bank debt was not drastically affected because the paydown was not urgent.

J.P. Morgan, UBS Warburg and Goldman Sachs are tentatively setting aside Friday as the launch date for syndication of a $325 million credit facility backing the $620 million leveraged buyout of the waterworks distribution business of United States Filter by Thomas H. Lee Partners and J.P. Morgan Partners. The bank financing consists of a $75 million revolver priced at LIBOR plus 3% and a $250 million "B" term loan with a spread of 31Ž 2% over LIBOR. The buyout also will be financed with $200 million in subordinated notes, according to a banker familiar with the transaction. Officials at the banks either declined to comment or did not return calls.

Ambac Assurance Corp. has hired Evy Adamidou as first v.p. and senior transactor for collateralized debt obligations and credit derivatives, says Michael Schoezer, managing director and head of structured finance and credit derivatives. She will start Wednesday.