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Magnum Hunter Resources has launched the retail round of its $275 million loan backing its merger with Prize Energy. The company has wrapped a successful bond offering and managing agent round and this is the final piece to be completed. According to a banker familiar with the situation, four banks have come in at the senior managing agent level, in addition to leads Deutsche Bank, CIBC World Markets and BNP Paribas. Pricing on the three-year borrowing-base facility is LIBOR plus 21/ 4%, but the borrowing base transaction still carries too low a spread to be of interest to non-bank players, according to the banker.

John Wotowicz, managing director and head of European leveraged finance at Morgan Stanley, will move back to New York to assume "a very senior role in covering some of the firm's most important leveraged finance clients," according to a senior firm official, who would not be more specific. The reassignment of Wotowicz is the latest move in an effort by the company to rebuild its leveraged finance business. Morgan Stanley fell from fourth place in the U.S. high-yield underwriting league tables in 2000 to sixth place in 2001. So far this year, the firm is in eighth place, according to Bloomberg. Competitors say it became very cautious after it suffered some high profile losses in its trading group. The official says additional changes in the leveraged finance group will be announced in the next few weeks, but he would not give further details. "It's more of an incremental repositioning than a wholesale restructuring," he says.

Morgan Stanley has created a new management structure for its corporate bond research group, organizing analysts into teams across sectors and across the credit curve from high-yield to high-grade. The goal is to help investors make relative value comparisons across industries, and across the increasingly narrow divide between junk and high-grade credits, according to Bill Reiland, the firm's head of U.S. credit research. Morgan Stanley started to address the gap between high-yield and high-grade last year (BW, 8/19).

Orrick, Herrington & Sutcliffe has expanded its structured finance group by hiring Michael Miran in a "of counsel capacity," a position junior to partner. He will focus on insurance-related securitization, says Ed DeSear, partner, who heads a 30-person structured finance unit for the New York-based law firm and to whom Miran will report. In his new function, Miran will help structure securitizations utilizing insurance products and insurance-like structures. His main focus will be to provide credit enhancement, or bring lower-rated securities to a higher rating level by providing credit support to the structure. The position is a newly created one reflecting the expansion of the securitization practice within the firm, says Miran.

A handful of borrowers have come to market in recent weeks to score cheaper deals via refinancing, pinching investors eager to stay in deals but loath to give up precious basis points. Iron Mountain,Caremark RX, Isle of Capri and Printpack have all cashed in over the past few weeks, shaving as much as 3/4% off the pricing on their deals. Investors are forcing smiles and chipping in for the refinancings, but it isn't easy. "You don't really want to see the paper in your portfolio deliver poorer returns," said one investor, noting that a name that was paying LIBOR plus 3% or more is now considerably less juicy. "But you do need to stay weighted and stay in on a deal."

Quotes on Covanta Energy's bank debt ranged as much as 15-18 points last week after the company filed for bankruptcy on Monday and word of a debtor-in-possession deal circulated. Dealers had quoted the name as high as the low 70s and as low as the mid-50s over the week with one trade reported at 60. Market players suggest that there is a DIP on the table that will offer participants extra security. "Some of the unfunded commitments like the letters of credit will get rolled into the DIP," explained one trader of the rumored deal. More information could not be obtained by press time. Calls to Lou Walters, company treasurer, were referred to a spokesman who did not return calls.

STERIS used strong banking relationships and better operating performance to refinance a $325 million, three-year revolver maturing in June 2003 under more favorable terms. The new $325 million credit offers the company lower borrowing costs and increased covenant flexibility, said Bill Aamoth, company treasurer. He noted that "pricing is much improved," but declined to elaborate on the exact pricing and covenant changes.

Fixed-income strategists disagree over whether the prospect of declining foreign investment as a percentage of total new issuance in the U.S. corporate bond market will significantly impact spreads. Last year's increase in foreign investment was critical to helping the market absorb a record year in corporate bond issuance, says Louise Purtle, head of U.S. credit strategy at Creditsights, an independent fixed-income research firm. Still, Purtle sees that trend reversing for two reasons. First, she says negative carry in the dollar versus the euro will reduce incentives to invest in dollar-denominated issues. Also, she believes the foreign investors were attracted to the U.S. market because it gave them an opportunity to diversify their sector allocation and credit risk. However, much of the recent surge in issuance is in high-quality, financial institutions seeking to reduce their reliance on commercial paper. Purtle says foreign investors have sufficient opportunity to invest in such credits in their home countries.

An improved financial position and a strategically sound acquisition have resulted in a Moody's Investors Service Ba3 rating for the company's $300 million credit. Bank of America and FleetBoston Financial lead the deal, which is currently in the market (see story, page 3). Team Health, which provides physician staffing and administrative services to hospitals, is buying Spectrum Healthcare Resources for $147 million, explained Russell Pomerantz, v.p. and senior analyst at Moody's. In addition to the new rating, Team Health's $100 million in 12% senior subordinated notes have been upgraded to B2 from B3, due to an improving credit profile since a recapitalization in 1999 and consistent performance.

Fitch Ratings affirmed Tenneco Automotive's senior secured bank debt at B+ as the company focused on managing its cash and cutting its working capital needs in the midst of a difficult environment for auto-part companies. "Last year they did well to generate cash by focusing on the working capital base," said Scott Lee, Fitch analyst. He noted that debt on the company's balance sheet declined by $12 million relative to last year. "On top of that their cash balances increased and they have ample liquidity in their revolver and cash on hand," he added.

Following Fiat's announcement of a 20% drop in sales for March, London-based analysts say it is time to sell its bonds. Despite enjoying a massive spread tightening last month when Moody's Investors Service put Fiat on review for downgrade--its bonds tightened by 50 to 60 basis points--analysts expect the auto-maker to be downgraded one notch from Baa2 and its spreads to blow out. "It's time to get out," says Cyril Benayoun, an analyst at BNP Paribas. Much of Fiat's tightening to date has nothing to do with the credit's fundamentals, but has come on the back of general positive sentiment on the economic recovery, which caused spreads throughout the sector to contract, he adds.