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UK non-conforming mortgage lender Preferred Mortgages Limited this week launched its first securitisation of the year, a £200m transaction lead managed by Credit Suisse First Boston. With Kensington Group, Mortgages plc and Southern Pacific waiting to issue, this was the first of a series of transactions in the UK non-conforming residential mortgage sector. The lender's issuance has increased since its management buy-out in May led by Barclays Private Equity. Preferred Residential Securities 5 plc is its largest transaction to date and was the first to offer an interest-only detachable coupon on the triple-A tranche.

The outstanding notional value of credit-default swaps has grown by 31% in the first six months of the year, while the combined interest rate and currency swaps market has grown 14%, according to the International Swaps and Derivatives Association's mid-year flash survey. The organization plans to release data tomorrow that for the first time will include igures detailing the size of the equity derivatives market. Stacy Carey, policy director in New York, said the organization decided to add equity derivatives to its survey because there is not a lot of data covering this market.

Credit Suisse First Boston and Salomon Smith Barney are in the market with a new seven-and-a-half year, $210 million "C" term loan for Terex. The loan is priced at LIBOR plus 2 1/2% and backs the company's $270 million acquisition of Genie Holdings. The incremental tranche was launched by CSFB and Salomon on Sept. 17, according to Kevin O'Reilly, v.p. of investor relations for Terex. In addition to the loan, which is rated Ba3, $65 million in Terex common stock will be used to cover the Genie transaction, with Westport, Conn.-based Terex assuming $195 million of Genie's debt.

Dresser plans to pay down approximately $23 million of its eight-year, $455 million "B" term loan by the end of the month. The company will pay down $30 million as part of a debt reduction strategy to combat the economic slump, said James Nattier, cfo. "Currently, in the depressed economic environment our focus is on repaying debt," Nattier noted. The reduction will be funded with cash on the company's balance sheet. The "B" piece has no call protection.

The $475 million Flexi-Van credit led by Fleet Bank and Scotia Capital is being allocated this week and will move into the secondary market next week after adjustments were made to the structure. The $325 million revolver was downsized by $25 million to $300 million with a commensurate increase on the $100 million "B" term loan to $125 million, a banker noted. The credit refinances existing debt and backs the Kenilworth, N.J., company's $180 million acquisition of the chassis leasing businesses of GE Capital's TIP unit, he added. Pricing is LIBOR plus 2 1/4% on the three-year revolver and LIBOR plus 3% on the five-year "B" loan, with a 1/8% upfront fee on the "B."

Wachovia Securities is reportedly in the market with a $115 million loan for Precise Technology, a Code Hennessy & Simmons portfolio company that manufactures precision injection molds and molded plastic components. The loan includes a $35 million borrowing-base revolver and a $50 million "A" loan, priced at LIBOR plus 4%. A $30 million institutional piece has a LIBOR plus 4 1/2% spread. A Wachovia spokeswoman declined to comment on the transaction and Brian Simmons, a partner at the private-equity shop, did not return calls. The leverage levels are 2.3 times and 3.7 times, according to an official familiar with the situation.

Wireless names have firmed up in the secondary loan market in the path of industry-bellwether Nextel Communications, which has crawled up roughly 10 points over the last month and was trading at trading at 88 1/4 this week. Traders said a study that claimed cell phone usage would double by 2006 also contributed to the positive run. The source of this research could not be determined.

By Tom Groenfeldt

Tesoro Petroleum's bank debt has fallen from the low 90s to 84-85 1/2, with a few small trades taking place in that range. The company is currently in negotiations with its lending group to amend its bank covenants. One trader suggested that the bank group was looking to take out all its existing covenants and replace them with minimum EBITDA and maximum capital expenditure clauses. Market players predicted that levels would continue to slide. "I think that it's going to march its way to the down into the 70s. There's just too much debt there," one trader said. Calls to Gregory Wright, cfo, were not returned.

This week's Guest Column was written by a derivatives lawyer in London who wishes to remain anonymous.

Risk And Return In Intrinsic Time

U.S. dollar/Canadian dollar risk reversals flipped last week as the greenback appreciated against its Canadian counterpart and investors bet that, for the short-term at least, the dollar will remain strong. Twenty-five delta risk reversals shifted to 0.15 vol in favor of dollar calls/Canadian puts from 0.15 vol the other way around. The dollar rose to CAD1.585 Thursday from CAD1.56 Monday in New York.