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Steve Kohlhagen, a former University of California, Berkeley professor who built the fixed income derivatives business at Wachovia Securities, is ending his decade-long stint as head of all fixed income sales and trading for derivatives and cash at the Charlotte, N.C.-based firm. Kohlhagen, 54, said he will be leaving Wachovia in August to pursue a career writing mystery novels with his wife, Gale. "I spent 10 years at Berkeley and 10 on Wall Street: it's time to move on," he said. However, he has agreed to stay on board through the last half of 2002 to continue overseeing risk management for the fourth largest financial holding company in the U.S. and help it to find a successor for his position. "We've already started searching for a successor to head the division in Charlotte," Kohlhagen said.

The Tokio Marine and Fire Insurance Co. is planning to structure in the coming weeks what is believed to be the first typhoon derivatives contract. "It's the first of its kind in the world," said Toshihiko Aizawa, head of the product development group in Tokyo. He added, "Typhoons are a constant concern for people and companies in Japan--we expect a lot of demand for this product."

Baring Asset Management, which manages a total of $16.24 billion in global fixed- income and $500 million in its global high-yield portfolio, is looking to add new paper from European high-yield issuers. "We've been quite active in new issuance on the high-yield side. We have become involved where we feel comfortable," says Toby Nangle, fund manager for fixed-income and currency. Most recently, Baring has bought into deals from Sanitec and JohnsonDiversey. "The markets are so small it's hard to get any volume on trades, but if good deals are coming through the pipeline, we will add issues opportunistically," says Nangle. He declined to say which specific trades he was considering.

Mike Materasso, portfolio manager with Fiduciary Trust Co. International, says he will rotate 5% of one of the firm's $3 billion funds, or $150 million, from Treasuries and agencies into sovereign bonds over the next three weeks. He reasons that sovereigns have more room for appreciation than in the U.S. as prospect for future growth in Canada, Australia or Germany remains lower. The firm will stay underweight on the five-year part of the U.S. curve, because of the Treasury's announcement that it may issue five-year Treasuries on a monthly basis, a move that would inflate supply and depreciate prices.

www.blowout.com ... One buysider speculating on the likely performance of an upcoming credit said it should blow out, on the reasoning that everything else is blowing out. "If you or I were to launch a deal it would probably fly," he joked. "It's like the dot.com era of the loan world."

Merrill Lynch Investment Managers (MLIM) has been selling telecom paper, while adding cyclical names with stable cash flow on the view that investor sentiment is improving, but confidence is still shaky regarding the macroeconomic picture, corporate profits, and the ability of companies to execute their business plans. John Burger, manager of the firm's $1.45 billion corporate total return portfolio, says MLIM recently sold $10 million in telecom names such as the Vodafone 7.75% notes of '10 when they were at 128 basis points over Treasuries because the telecom sector does not have stable cash flow. It added $20 million in cyclical sectors, such as autos, lodging and leisure. Those include the Starwood Resorts 7.375% notes of '07, and the Cendant Corporation 6.875% notes of '06. The Starwood bonds were 292 basis points over the curve at the time of the purchase, while the Cendant paper was at 325 over Treasuries.

This chart, provided by Citibank/Salomon Smith Barney Inc., tracks bid-ask prices for par credit facilities that trade in the secondary market. It also tracks facility amounts, ratings, pricing and maturities.

As the $565 million "B" loan for Corrections Corporation of America (CCA) breaks into the secondary market, Moody's Investors Service has upgraded the rating to B1 from B2. The successful Lehman Brothers led-refinancing is a key factor in the upgrade, as much of the CCA debt was maturing at the end of this year, and there was refinancing risk. With this done, CCA will have amortization increasing from $15 million to $27 million over the next four years, and will have no significant payments before 2008, thus providing the company with a more laddered debt maturity schedule, according to Moody's.

Spreads on institutional term loans are dropping to the lowest levels since the second quarter of 2000 even below pro rata pricing and the tightening is becoming uncomfortable for some institutional buyers. Raging demand in the "B" loan market and a continued lack of appetite for pro rata paper has spreads converging on deals such as the one led by CIBC World Markets and Bear Stearns backing Willis Stein & Partners purchase of Roundy's. The credit offers LIBOR plus 3% and LIBOR plus 31/ 4% for the prospective "B" and pro rata, respectively, said one banker. J.P. Morgan and Morgan Stanley last week cut pricing on the heavily oversubscribed $350 million "B" loan for Seagate Technologies 1/2% to a skinny LIBOR plus 2%--the same as the $150 million pro rata.

ON Semiconductor traded up to 97 last week after the company announced that it would pay down part of its term loan with proceeds from a $300 million senior secured note offering. Bids have been rising over the past month with more than $100 million changing hands, dealers said. One dealer referred to the name as a "dead cat rising," after discussing how the credit had traded as low as 68. The name was pulled down by general fear of a semiconductor meltdown in the fall of 2001, explained one trader. The new notes mature in May 2008 with a coupon of 12%.

Fort Worth, Texas-based Range Resources, an oil and gas company, has refinanced its bank line and trimmed the number of banks in the group. "We had 12 banks in 1999, but that was for a $300 million facility, which we scaled back to $120 million," said Rodney Waller, senior v.p. of Range. "Having less banks makes it more manageable and the paperwork easier," Waller commented. He declined to name the banks no longer in the syndicate. The bank group is now seven, and consists of BANK ONE, J.P. Morgan, Credit Lyonnais, Fleet National Bank, Fortis Capital, Bank of Scotland, Compass Bank and Natexis Banques.

J.P. Morgan and Deutsche Bank will launch another add-on credit for Riverwood International this summer, hot on the heels of a recently completed $250 million add-on term loan from the banks. The institutional loan, expected also to be in the region of $250 million, will hit the market when Riverwood completes a $350 million initial public offering in the summer, said a banker. "There is a possibility of an additional term loan," said Steve Myers, a spokesman for the paperboard packaging company. The IPO will be used, with the new anticipated loan, to repay outstanding senior and subordinated notes and portions of the revolver, he said.