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Carl Icahn is in the market for XO Communications' bank debt and reportedly has been buying up pieces to help protect his bond position in the beleaguered telecom company. Market players said Icahn made a direct appeal to investors in the bank debt, bypassing Wall Street trading desks by sending a letter saying he was looking to buy. The debt has moved up five points since Icahn's letter went out about two weeks ago. Approximately $25 million was believed to have changed hands at as high as 52, although the amount that Icahn bought could not be determined. The debt had been trading in the 46-47 range. Icahn's office declined to provide a copy of the letter sent to investors.

With the $14 billion of investment grade issuance that was issued this week, the investment grade corporate bond market has hit a $250 billion year-to-date total, which gets us halfway to the CreditSights full-year forecast for high grade supply. The pace reflects an uptick from May's subdued levels though we are still well shy of the thumping volume seen during March, and the average deal size is also rising. At $600 million we are heading into the top end of the range indicating both more depressed high yield primary market conditions of late and the effect of the sizeable programs of the likes of GE Capital. The impact of GECC's issuance activity is also evident in the average rating quality, which has been trending up over the last four weeks. The better bid tone in the market was seen with upsizing reported in higher quality issues in defensive sectors and ready demand found this week for even "troubled" names such as El Paso.

The $1.8 billion, 364-day revolving credit launched last week forWilliams Companies may face challenges from persistent questions about the propriety of its trading operations, according to Power Finance & Risk, an LMW sister publication. Bankers said the company story is a strong one, but the focus on trading could be a problem. "If they continue to be in the headlines every day, whether it is fair or not, it is going to make it tough," says one official, who attended the Houston bank meeting. The Federal Regulatory Energy Commission last week said the company had failed to cooperate with information requests related to its investigation into power trading in the western U.S. The move followed a published report that Williams tried to manipulate gas prices in California two years ago. Kelly Swan, a company spokesman, denied both charges.

Meanwhile, CSFB launched alphabet loans for Mueller and Metaldyne last week. The seven-year, $350 million "D" loan for Metaldyne is co-led with J.P. Morgan and offers a spread of LIBOR plus 23/ 4%. Rated BB-/B1, the credit backs the separation of the TriMas business from Metaldyne on behalf of sponsor group Heartland Industrial Partners.

Auto-parts retailer AutoZone has recently added a $150 million credit to its $200 million "A" term loan, extending the maturity 18 months past its former May 2003 expiration date. The company also renewed a $300 million, 364-day revolver that will be used to back up its commercial paper program, according to Michael Archbold, senior v.p. and cfo.

Bear Stearns has filled the "C" tranche created for Appleton Papers, with almost all the current investor group rolling into the deal. The deal was set to close last Thursday, said a banker, adding no new investors were invited into the deal. Some buysiders and bankers cited the deal as a challenge, pointing out the new $115 million "C" tranche is priced 1% below the existing "B," which offers a spread of LIBOR plus 41/ 4%. The original credit launched last year had to overcome concerns that Appleton operates in a sunset industry, at a time when the buyside was gun shy about committing to all but the defensive credits on offer (LMW, 8/10).

Shelley Ben Nathan has resigned from Bear Stearns, where she was a managing director and high-yield retail analyst, according to an e-mail message sent out to clients last Friday, which was her last day at the firm. "I have decided to change gears for a while and focus my energies full time on my family," she wrote. She has four children under five years old. Ben Nathan placed third in the high-yield retail sector for four consecutive years from 1997-2000 on the Institutional Investor All-America Fixed-Income Research Team. She did not return calls.

Banc of America Securities has hired an additional European economist as part of its expansion plans. Holger Schmieding joins the firm from his own independent economics shop, which he says he recently sold. Prior to running his own show, Schmieding worked at Merrill Lynch. Schmieding will work with Lorenzo Codogno, co-head of European economics in London. The duo reports to Mickey Levy, New York-based head of global economics.

Credit Suisse First Boston supplanted incumbent Lehman Brothers to lead a $515 million recapitalization for restaurant-chain Buffet's after the Lehman bankers who led the original leveraged buyout in 2000 departed the firm. With the door open, CSFB leveraged its position as lead on existing mezzanine debt and walked in with a pledge to appease mezzanine investors, who needed some caressing. "Getting the mezz holders to agree to the terms was important, and they were due some serious pre-payment penalties," one banker said. The credit hit the market last week.

Tough competition in the contact lens-care products (CLCP) and ophthalmic surgical products sectors, along with a changing U.S. market for contact lens solutions, are strong factors impacting Advanced Medical Optics' (AMO) debut bank facilities, according to ratings agencies looking at the deal. The $140 million in senior secured bank debt, split between a $40 million, five-year revolver and a six-year, $100 million term loan, has been rated B1 by Moody's Investors Service, while Standard & Poor's views the bank debt a notch higher at BB-. The bank deal, launched last week week by Merrill Lynch and Bank of America, and $175 million in senior subordinated notes, backs the spin-off of AMO from Allergan (LMW, 6/3).

UBS Warburg and Deutsche Bank will launch a $165 million high-yield bond deal and syndicate a $30 million revolver to back the buyout of Dave & Buster's by senior management and Investcorp. The acquisition price is $255 million, including the assumption of Dave & Buster's debt, explained an Investcorp spokesman, who declined comment on the structure of the financing. A banker familiar with the deal said the company is more interested in long-term money than with using bank debt to fund the deal. Pricing has not yet been decided. "It is likely UBS and Deutsche Bank will look to bring in a couple of Investcorp relationship banks on the revolver," said the banker.

BANK ONE is shopping a $100 million, five-year "B" loan for Acuity Brands, after the Atlanta-based lighting and specialty chemicals company realized the pro rata market was essentially closed for further business. "We want an extra $100 million for liquidity purposes, but we realized it would be very difficult to get from the banks," said Dan Smith, treasurer for Acuity, explaining the move to the "B" market. BANK ONE closed on a $105 million, 364-day and $105 million, three-year line in March, after the company originally targeted $200 million in borrowings.