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The low price of an outstanding issue by Panavision explains the unusual structure of a proposed new $250 million bond deal by the company, according to an official familiar with the deal. The proposed issue would give bondholders a second lien on collateral that is part of the deal--a higher degree of security than is typical in media sector issues, one media analyst says. However, higher security was needed because a deal comparable in structure to the outstanding issue would require a coupon of well over 20%, since that is where the outstanding issue was trading last week. Several high-yield desks did not have trading levels for the camera maker's single outstanding high-yield issue, its 9.625% senior discount notes of '06 (Caa1/B-), but one sell-side desk quoted the bonds at 40 last Tuesday. High-yield officials offer several explanations for the low price, including the company's high leverage (5.5-6 times debt-to-cash flow), the bonds' poor position in the capital structure given the amount of bank debt outstanding, and concerns that competition from digital technology will reduce cash flow.

Marconi is poised to proceed with a debt-for-equity swap in a move to restructure its balance sheet, London-based telecom analysts say. The move would involve bondholders eventually swapping their debt for shares. The increased likelihood of the swap comes after Moody's Investors Service downgraded Marconi's debt from B2 to Ca last week. "We've been very negative on this situation since last year and it is clear some sort of restructuring will take place, most likely a debt-for-equity swap," says Aizaz Shaikh, a telecom analyst at BNP Paribas.

Nomura Securities International in London has hired Christian Marx, formerly head of collateralized debt obligation structuring for Europe at Morgan Stanley in London, to head its CDO group, a newly created position. Tariq Rafique, managing director and head of the securitization and asset finance group and to whom Marx will report, says Marx's hire adds some "additional horse power" to Nomura's CDO capability. "Our goal is to be a significant player," he says. Currently, Nomura has five people dedicated to its CDO business, and that number will increase as the business grows, adds Rafique.

UBS Warburg andCredit Suisse First Boston will launch a bank meeting on April 2 for Harvest/ AMI Holdings, a newly formed company from New York-based leveraged buyout shop Harvest Partners for the acquisition of Associated Materials. The $165 million credit will be split between a $40 million five-year revolver and a $125 million seven-year "B" term loan. Spreads and a commitment fee have not been decided yet, said a banker.

Just over $14 billion in investment grade supply came to market this week bringing the year-to-date total to $162 billion or $54 billion per month. The highlights of the week were the two tranche deal for CIT and the $7.3 billion multi-tranche, multi-currency deal for Morgan Stanley, which has the distinction of being the largest deal ever by a securities firm. The 30-year tranche has remained well-supported given the scarcity of paper in the long end in the finance sector. Look for additional issuance from the finance sector given the current uncertainty in the short-term markets and the prospect for higher rates later in the year. With 1Q02 issuance already exceeding expectations and remaining on pace with 1Q01, it is worthwhile to put this trend into the context of net issuance by looking at the calendar of redemptions for the year. Using maturities of securities that qualified for inclusion in aggregate corporate indexes (which removes the impact of money market instruments), redemptions maintain a solid monthly pace in the range of $10-$15 billion throughout the year with the sole exception of November. This pace slightly exceeds that of 2001.

Ask Wally Hofer-Neder if DePfa is going to have to pay up for its inaugural Irish covered bond issue, and her immediate response is a slightly mischievous " we hope not". Her argument on this score is lucid enough. "We're not introducing a new bank," she says. "We are just launching a new product. But our brand name is well established in the market and we are offering the same quality of assets. We have also said that we want the Irish product to be superior to the existing German product, so why should we pay up?

The French market for obligations foncières (OFs) remains comfortably the most concentrated covered bond market in Europe, with two banks, Dexia Municipal Agency (DexMA) and Crédit Foncier de France (CFF) accounting for the lion's share of issuance. But last October the market became a little less concentrated when CIF Euromortgage launched its debut issue, a Eu1bn seven year deal via BNP Paribas and Deutsche Bank, priced at about 4bp over CFF to incorporate a premium for the new issuer.

Only a few years ago, pricing a jumbo Pfandbrief was straightforward: once you knew the maturity, you simply extrapolated the spread from a relatively clean yield curve. Today, a host of unknowns need to be considered in the European covered bond market: Which legal framework applies? What is in the asset pool? And how liquid will it be? Here, Philip Moore reports on the issues driving this differentiation.

If name differentiation is now the leitmotif in the German Pfandbrief market, few if any issuers can claim to have done more to impress their identity upon investors than DePfa. Over the last 12 months, Depfa has done this in two ways. First, by cleaving itself into two, at a time - as its marketing campaign ceaselessly reminds everybody - when other banks seem to merge and merge and merge. Second, by projecting a new identity that aims, highly ambitiously, to reposition the bank within the capital market as an agency-style issuer à la Freddie Mac or Kreditanstalt für Wiederaufbau (KfW), and to distance itself from those borrowers in the Pfandbrief market that have traditionally been viewed as opportunistic rather than strategic.

Last year, Luxembourg's market for lettres de gage failed, once again, to live up to its potential, with new issuance volume contracting from Eu3.4bn in 2000 to Eu2.6bn in 2001. As analysts at SG put it in their review of the European covered bond sector in 2001, activity more or less "dried up" having "probably suffered from the prospects of amendments to the German legal framework and the adoption of new Irish legislation."

Beyond the narrow confines of one or two German cities, it would be difficult to find any banker who would seriously argue that the European covered bond market to have made the most impressive progress in 2001 was any other than the Spanish cédulas hipotecarias market. This progress was made on four fronts. First, the size of the market expanded rapidly, with total outstanding issuance rising from Eu5.5bn in 2000 to Eu13.5bn in 2001. Second, the number of issuers in the market doubled from two to four. Third, the cédulas market provided Europe with some welcome yield curve diversification, with Caja Madrid's Eu1bn 2016 transaction in June providing an elusive opportunity for investors to gain exposure to the 15 year maturity in the covered bond market.