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Wells Capital is making wholesale changes to its corporate bond portfolio that will include nearly quadrupling the number of credits in which it invests and taking quicker steps to sell out-of-favor issues. The abrupt change is an effort to limit the potential damage from any future individual credit blowups. The new strategy is being installed by Wells Capital's recently hired portfolio management team, which wants to prevent a recurrence of the poor performance that hurt their predecessors. At the same time, Graham Allen has resigned from his position as director of global fixed-income at the firm. Allen acknowledges that his responsibilities shifted earlier this year due to poor performance in the firm's core fixed-income portfolio. He says that he had a place at the firm, but decided that after 27 years in the business, it was time for a break. Plans to start his own mutual fund firm, to be called Oracle Investments, are already underway.

Merrill Lynch managed to retain collateralized mortgage obligation trading and sales veteran Laura Zwak after she announced her intention to join Morgan Stanley's growing CMO effort last Tuesday, according to an individual close to the situation. This insider says that increased compensation was the basis for her decision to stay at Merrill. Zwak was unavailable to comment.

Moody's Investors Service lowered its ratings of Dynamic Details' combined $123 million senior secured credit facilities from B1 to B3. The downgrade reflects the company's continuing losses despite restructuring initiatives and concern over Dynamic Details' spending capacity for information technology and future research and development. Moody's does not expect the Anaheim, Calif.- based company to recover anytime soon, and warns of later downgrades pending further cash balance depreciation that could cause noncompliance of the company's recently amended bank agreement. The sixth amendment of Dynamic Details' credit agreement reset its financial covenants through Dec. 31, 2003, allowing a waiver of previous covenant violations. The credit comprises a revolver and "A" and "B" tranches. "The market visibility for an upturn remains as murky at this time as it has been for months, and we are concerned in regard to their [Dynamic Details'] lackluster performance," stated Moody's senior analyst Howard Sitzer.

Nomura Securities International has hired Jean-Claude Khoury to bulk up its London-based securitization team. He will work on asset finance transactions and securitizations, a Nomura official says. He moves over from Deutsche Bank, where he was a v.p. covering conduits, collateralized loan obligations and residential mortgage-backed deals. Khoury left Deutsche Bank earlier this summer amidst a departmental reshuffle (BW, 7/22). He will report to Tariq Rafique, head of securitization and asset finance. Rafique says he still has some hiring to do.

Qwest Communications International was rumored to have traded a couple of times in the high 80s context last week, flat compared to where it was moving two weeks ago. The company announced last Tuesday that its was withdrawing its application to the Federal Communications Commission (FCC) to provide long-distance service in nine states due to lingering questions regarding the company's plans to restate its financial statements.

TheBank of America, Salomon Smith Barney-led credit for Rayovac Corp. has received a solid response in Europe and the U.S. since its post-Labor Day launch, with about $125 million raised so far for the $375 million U.S. "B" piece. A few $25-30 million tickets came in from individual funds, said a banker familiar with the transaction. The "B" tranche is being offered at LIBOR plus 31/ 4% with a 10 basis points up-front fee. The European tranche has also sparked interest, with some investors looking for the piece to be expanded from the current E50 million size. One banker said a larger tranche would enhance liquidity and allow bigger pieces to be assigned. It has not yet been decided whether to adjust the tranches though, she noted.

Wachovia Securities' $450 million bank deal for Atlanta-based Gray Communications Systems blew out within a day of launch after a bank meeting on Sept. 9. "Syndication is proceeding well," said Jim Ryan, cfo of Gray -- who would not be drawn into whether the deal would be flexed or not. "We're a name known in television and we have a proven track record in the debt markets. Gray did a loan deal one year ago in a very difficult bank market," he added, commenting on why the company thought bank debt investors would be receptive to a loan from the seasoned issuer.

The high-yield auto parts sector will remain under pressure for the foreseeable future as car companies continue to squeeze parts manufacturers on pricing, according to one buy-side analyst and one sell-sider. The buy-side analyst says the firm where he works, a Midwestern money manager, recently sold its Dana Corp. 9% notes of '11 (Ba3/BB) at 96, on the view that risks remain weighted to the downside because the industry is very competitive. He says the firm might buy the bonds back if they dip a few points, but would not sell more unless it finds a decent replacement that trades at a lower price.

The recent influx of new cash caused the higher-rated issues to trade higher last week, according to some traders. Others say the market merely trod water, though it clearly outperformed equities. Jefferson Smurfit priced a $700 million deal--the most sizeable new junk issue in several weeks. Here is selected action.

Kroll tapped Goldman Sachs for a $100 million facility, terminating its pre-existing $15 million revolver with Foothill Capital.Mike Petrullo, deputy chief operating officer, said the company went with Goldman to build on a growing relationship. "They are a terrific institution that we want a longer association with," he said. "We are also doing an equity offering in which Goldman is going to lead, so it was a really great opportunity from the financing end to be associated with Goldman Sachs and have them advise us through that and actually be the majority placement of the financing."

Dealers saidLand O'Lakes traded a few times in the 87-89 context last week. The Arden Hills, Minn.-based co-operative held an investor meeting in New York last Tuesday. One trader said the response from that meeting was neutral, but another said the situation is not good. Levels for Land O' Lakes' bank debt have been falling since the company released its quarterly earnings report, which spooked investors. Before the results came out on July 26, the company's bank debt was pricing above par (LMW, 8/19). Calls to Daniel Knutson, cfo, were referred to a spokeswoman. The company revised its full-year EBITDA down $10 million to $245 million with the key reason for that adjustment coming from the affect of low hog prices on the company's swine feed business, a spokeswoman noted. "Despite the downturn in dairy and swine, the company believes that $245 million in full year EBITDA is achievable," she said. She added that Land O' Lakes has a solid liquidity position and ample room under its covenants; retail volume in the dairy segment is likely to increase; and the Purina Mills synergies are ahead of schedule.

A $25 million piece of Tyco International's bank debt traded at 95 early last week. The move came before the Manhattan district attorney indicted three of the company's former executives. The parties involved in the trade could not be determined. One trader speculated that the indictments would have limited material impact on the company. It's under new management now and doing well, he noted.