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URS scaled back its planned $250 million bond offering by $25 million as the market demanded a higher yield than expected. With price talk in the 12% range, Credit Suisse First Boston and Wells Fargo Bank were able to shift allocation to the "A" term loan of the accompanying bank deal, a banker said, adding that some covenants changed in the process. In addition, pricing reportedly was flexed up by an undisclosed amount on the $350 million "B" term loan, but this could not be confirmed. Pricing was set to open at LIBOR plus 31/ 2%. Calls to CSFB and Wells Fargo were not returned.

Wachovia Securities has underwritten a $340 million credit facility backing Veridian's $227 million acquisition of Signal, a provider of information technology and engineering services to the Department of Defense and other U.S. government agencies. In June, Wachovia provided Veridian with a $200 million credit, comprising a $70 million revolver and a $130 million "B" term loan, and the new line is an expansion of that facility, one banker explained. The new money will consist of a $160 million add-on to the term loan. Officials at Wachovia did not return calls.

Primary market volumes remained depressed this week with just $3 billion of investment grade issuance coming to market but there were some notable developments. On a macro level the rally in Treasury yields that followed from the Fed moving its bias of risks towards weakness has taken yields to historic lows. This has raised the question of whether we will see a surge in opportunistic funding from yield-sensitive issuers who seek to capture very appealing levels at which to lock in long term funding. We have seen evidence of this phenomenon each time yields have hit new long term lows and it is likely we will see further evidence of it when the primary market picks up speed in September, post the summer hiatus, when we expect volume to pick up from current depressed levels. The second notable event of the primary market this week was the resumption of telecom issuance as SBC Communications brought $1 billion of 10-years to market at a spread of + 200 bp. The deal was reassuring in that it was placed successfully even in the week when the company had its Aa3 rating place on negative credit watch by Moody's, reinforcing that investors recognized the problems that have plagued credits such as WorldCom and Qwest can be isolated despite the challenges that the industry as a whole faces.

Centre Pacific, a Los Angeles-based asset management shop led by John Casparian andHeather Creeden, is in the market with a $409 million collateralized loan obligation called Cascade CLO, the firm's second CLO. UBS Warburg is the underwriter for the cash-flow arbitrage deal, which will consist of high-yield loans and some bonds, according to a banker. It could not be ascertained how much of the underlying collateral has already been purchased. Centre Pacific's debut vehicle, Sierra CLO 1, contained 90% loans and just under 10% bonds.

A small piece of Adelphia Communications' Century Cable term loan is believed to have traded in the 63 1/2 context last week, down from the 68 level where it had been quoted two weeks ago. In its 8-K filing last Monday, Adelphia disclosed that approximately 600,000 subscribers previously believed to be collateral for the company's Century Cable and Olympus credit facilities did not back those loans. According to an analyst that follows the company, the development would lower the recovery value expected on the Century Cable debt but not Olympus, which is considered over-collateralized.

Levels for Land O' Lakes' bank debt has fallen 10 points since the company released its quarterly earnings report, triggering some jitters among investors. "Investors are spooked by their latest release," said one dealer. Before the results came out on July 26, the company's bank debt was sitting pretty, clocking in above par. Since then, levels have fallen for three weeks and were recorded in the 90-93 context when LMW went to press, according to LoanX. No trades could be determined.

Lord Abbett originated its first collateralized debt obligation transaction--a $179 million deal likely to close next week, says a CDO market official. Called Golden Night CBO, the deal, underwritten by Merrill Lynch, is only the third high-yield CDO to have been priced this year following Salomon Smith Barney's Newton CDO, which was priced in the first quarter, and Bear Stearns' Silver Lake Funding, which was priced three weeks ago. CDO structurers say conditions for high-yield arbitrage are better in the past two months with high-yield bond spreads widening. Yet, they add, finding investors remains challenging. This official says Golden Night was first marketed in early July with a $300-400 million target size. Due to the challenge of finding mezzanine and equity investors in deals backed by high-yield collateral, the deal was downsized to $179 million, he says. Scott Bohner, CDO director at Merrill Lynch, declined to comment. Chris Towle, portfolio manager at Lord Abbett, did not return calls by press time.

Magellan Health Services jumped into the spotlight last week as Moody's Investors Service placed the company on review for a possible downgrade over concerns that it might violate its bank covenants. Bank debt levels were said to have dipped from the 97-98 range into the mid-90s after the report, although no trades could be confirmed. "No one wants to get in front of anything with risk," a dealer commented.

The high-yield market "appears headed for a long bounce along the bottom," according to Marty Fridson, chief high-yield strategist at Merrill Lynch. However, at least one junk manager, Brendan White of Fort Washington Investment Advisors, thinks the time is right to increase high-yield allocation.

The $130 million credit facility backing Code Hennessy & Simmons' $275 million buyout of Otis Spunkmeyer is being allocated today. Approximately 20 accounts are said to have subscribed to the "B" term loan, which will close and fund later this week. Merrill Lynch and J.P. Morgan offered the 6.5-year "B" piece at 98 and reduced the size of the loan by $10 million to $110 million. Code Hennessy threw in additional equity to cover the reduction. Officials at Merrill declined to comment.

Roughly $10-15 million of Owens Corning bank debt changed hands last week as levels slid from the high 50s into the low 50s. One trader noted that investors were still nervous about the asbestos issues facing the company. In its most recent 10-Q filing last Monday, the company stated that "any estimate of liabilities for pending and expected future asbestos claims is subject to considerable uncertainty because such liabilities are influenced by numerous variables that are inherently difficult to predict."

PETCO Animal Supplies has clinched cheaper pricing after coming to market in an effort to cut its borrowing costs. By replacing a $193.5 million "B" term loan with a new "C" loan of the same size, the company was able to cut its interest rates from a spread of LIBOR plus 31/ 2% to LIBOR plus 3%. Norman Dowling, v.p. of finance, said it was a combination of strong company performance and market conditions that encouraged the company to go forward with the refinancing.