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A pair of sell-side gaming analysts are urging high-yield investors to add to their holdings in the sector. They predict a rally when second quarter earnings announcements kick off this week with Boyd Gaming. Jacques Cornet, analyst at CIBC World Markets, says gaming credits have traded off of late because money managers are liquidating assets to pay back investors fleeing high-yield and its telecom-related woes. He expects many gaming companies to easily beat analysts' estimates, and recently upgraded the sector from "market weight" to "outperform."

Andy Hay resigned last Monday from Morgan Stanley, where he was a senior high-grade corporate bond salesman, according to a person at the firm. The reason for his resignation could not be determined, and Hay could not be reached. Dennis Burns, Morgan Stanley's head of corporate bond sales, did not return calls.

A high-yield portfolio manager believes the bonds of Charter Communications are ready to begin climbing back, but a trader at another buy-side firm is not convinced. Brendan White, portfolio manager at Fort Washington Investment Advisors in Cincinnati, purchased some of the bonds last week. He says Fort Washington was never fully invested in the bellwether high-yield cable company, which was one of the priciest names in high-yield just a few months ago. "We had a small amount of exposure and were adding to it when the bonds ran away, so we never had a chance to build a real position," he says. He confesses that, "luck is the operative word," as to why he did not take a beating with the rest of the market on the name. White says Fort Washington worked out the value of Charter's assets and decided that the bonds were a bargain at last week's levels. "They've got the size. They're the most built out, and have the most updated technology [in the cable sector]," he says. Charter's 10.75% notes of '09 were bid at 69 last Thursday.

BNP Paribas has altered the reporting line for its London-based European securitization research group so that it now reports to a banker--Ra Sharma, global head of structured credit syndicate, instead of to the head of credit strategy. Two people at Paribas and securitization analysts at competing firms confirmed the change in reporting lines.

Prudential Capital's first collateralized debt obligation composed primarily of leveraged loans is now 85% ramped up and ready to close. According to Siew Chuah, senior analyst at Moody's Investors Service, liabilities have been priced on the bonds, which are underwritten by Salomon Smith Barney and TD Securities. Ross Smead, portfolio manager for Prudential's leveraged bank loan division, declined to comment.

Rabobank International, a high-profile collateralized debt obligation manager, has added E.A. Kratzman as executive director to head a new collateralized loan obligation effort, according to sister publication BondWeek. Kratzman reports to Sheldon Sussman, managing director and head of capital markets. Sussman said the position was created to support the bank's expansion into the CLO business, which he sees as a "logical and natural extension of Rabobank's already considerable presence as a CDO manager."

Kansas City Southern recently reduced its existing credit facility in an effort to decrease the company's exposure to floating interest rates, according to Paul Weyandt, treasurer. "We cannot justify being a railroad company and having over 50% floating-rate debt," Weyandt said, noting that most of the company's assets are long lived. The company replaced the bank debt with seven-year notes, so its interest-rate expense will increase. But the increased cost is worth it for the company, which removed some interest-rate risk from its income statement, he explained.

Salomon Smith Barney last week had to flex pricing upwards for two credits debuting in the institutional market. The buyside demanded flexes on Moore Corp. and Giant Eagle, citing a lack of familiarity with the names. Moore, a commercial printeing company, launched the refinancing of two facilities totaling $400 million last week, but investors refused to bite at LIBOR plus 21/ 4%. As a result, pricing has been flexed upwards 25 basis points on the six-year, $200 million "B" piece. Investors looking at Giant Eagle, which is co-led with Mellon Bank, were pushing for a 1/2% flex on the $550 million term loan, but they had to make do with a 1/4% boost to 21/ 2% over LIBOR.

US Bancorp Piper Jaffray Asset Management has hired Tony Rodriguez to oversee its $30 billion fixed-income portfolio. Rodriguez left the New York offices of Credit Suisse Asset Management (CSAM) last Friday, where he oversaw the firm's $5-6 billion in corporate bond assets. He will take charge of US Bancorp's 40-50 person Minneapolis-based team later this month. Rodriguez's former boss,Gregg Diliberto also resigned last week from his position as managing director and head of CSAM's core fixed-income assets. He is taking a senior fixed-income position within a $160 billion largely proprietary portfolio at Citigroup Global Investments. His hiring is not related to the departure of a team of portfolio managers from Citigroup Asset Management (see story, page 2.)

The incredibly shrinking spreads on new issue loans that have haunted investors like a B-grade movie for the better part of the last year are finally fattening up, thanks to horror stories playing out in other markets. Jitters in the equity markets over accounting scandals, a slackening of demand from retail funds and institutional buyers and three straight weeks of bond outflows have caused secondary pricing in the loan market to soften. Spreads over LIBOR are starting to follow suit and are getting bigger. "You've seen in the last 10 days the market has changed," said Art Zimmer, senior v.p. and portfolio manager at OppenheimerFunds. "Refinancings at lower spreads and new deals getting flexed down are not going to continue. People are putting their foot down." Zimmer cited a slackening demand from retail funds and institutional buyers as the reason behind the sea change.

The exceptionally low primary market volume this week resulted from a combination of summer doldrums, post July 4 hangover and the ongoing market dislocation as the equity meltdown continues. Examples of cancelled deals are growing, such as Merck's decision this week not to proceed with the planned bond sale for Medco on the back of the postponement of the IPO. With risk appetite minimal at best and non-existent for any company that is under an accounting cloud, primary market conditions are not conducive to placing the kind of deals that always took more legwork even at the best of times. Exemplary borrowers such as Wal-Mart however, are having little trouble with market access with WMT able to price $1 billion of 5-years at +50 this week. Total investment grade issuance for the week was just under $4 billion, making it one of the slowest weeks of the year.