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After a downtown LA source meeting with a group of loan bankers, one of II Newsletters more intrepid reporters was witness to a Reservoir Dogs-style moment. "The intersection was empty as four cop cars were blocking the road. LA's finest were wielding shotguns and screaming at two guys to get out of a pick-up truck. More cops with shotguns then arrived outside a Bank of America building a block away," the reporter said. When told it was a bank robbery, the reporter was reminded of Tarantino's epic, but noted, "without the cool music, nicely-tailored suits and (fortunately) blood."

Bryan Johanson, portfolio manager with C.S. McKee & Co., will rotate $22 million, or 3% of a $730 million fund he manages, from 10-year Treasuries Inflation Protected Securities (TIPS) into 10-year Treasuries. The move will be triggered when the 10-year Treasury yield reaches 5.38%. Last Monday, the 10-year yielded 5.28%.

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.

London-based Morley Fund Management, which manages £600 million in corporate and emerging market sovereign credits through the Norwich Higher Income Fund, is looking to add new issues to its portfolio. "This fund has had significant inflows from [Individual Savings Accounts] during this period. We are looking for new issues to take up some of the demand," says Roger Webb, fund manager. Webb would like to see more diverse issuance from investment-grade industrial and consumer names before adding in this sector. He is also keen on emerging market sovereign debt and hopes for positive capital returns for the year from that asset class. The fund is underweight high-yield with an allocation just under 30%. It devotes 10% to emerging market sovereign debt and 60% to investment-grade debt. The fund is benchmarked against the Merrill Lynch sterling high-yield index and the Merrill sterling investment-grade index. Webb is considering new issues on a case by case basis.

The primary market took center stage with a deluge of supply which weighed on spreads overall. Just over $23 billion in investment grade supply hit the market, with GE Capital's blockbuster $11 billion deal accounting for almost half of it. Bank and finance spreads were slightly wider as secondary trading was dominated by bonds being moved to accommodate the GE Capital mega-issue. The deal catapulted the finance company into the top five of new issues by deal size, with the distinction that it is the only non-telecom company in this elite group. Away from GE there was a rash of deals but despite the obvious weakening on the technical base that this is having, investors are still lining up to buy the bonds of companies that hit the sweet spot combining a clean bill of health on the accounting front, exposure to the cyclical upswing and some yield. Even some of the problem credits of the not-too-distant past are able to access the market as Williams came with a $1.5 billion two-tranche deal comprising 10- and 30-year bonds. High yield (including a $600 million deal from Turkey) printed $2.5 billion in new deals.

The primary market took center stage with a deluge of supply which weighed on spreads overall. Just over $23 billion in investment grade supply hit the market, with GE Capital's blockbuster $11 billion deal accounting for almost half of it. Bank and finance spreads were slightly wider as secondary trading was dominated by bonds being moved to accommodate the GE Capital mega-issue. The deal catapulted the finance company into the top five of new issues by deal size, with the distinction that it is the only non-telecom company in this elite group. Away from GE there was a rash of deals but despite the obvious weakening on the technical base that this is having, investors are still lining up to buy the bonds of companies that hit the sweet spot combining a clean bill of health on the accounting front, exposure to the cyclical upswing and some yield. Even some of the problem credits of the not-too-distant past are able to access the market as Williams came with a $1.5 billion two-tranche deal comprising 10- and 30-year bonds. High yield (including a $600 million deal from Turkey) printed $2.5 billion in new deals.

Specialty pharmaceutical company First Horizon Pharmaceutical tapped a $152 million six-month interim credit line from Deutsche Bank to acquire anti-hypertensive drug Sular from AstraZeneca, and First Horizon is now planning to take out the facility with either permanent debt, an equity offering--private or public-- or a hybrid. "The interim line gives First Horizon flexibility in terms of deciding to pay down the debt through an equity offering or permanent debt while enabling First Horizon to act quickly on the transaction," explained Bala Venkataraman, cfo of First Horizon.

Fitch Ratings has downgraded Tricon Global Restaurants to BB+ from BBB- following its announced acquisition of the Yorkshire Group, owner of the A&W and Long John Silver restaurant chains. Under the terms of the acquisition, Tricon, which runs Pizza Hut and KFC, will pay Yorkshire $270 million in cash and assume another $50 million of debt. The rating action reflects a higher level of leverage than had been anticipated due to the acquisition financing as well as incremental capital expenditures to develop the acquired brands and ongoing share repurchases, according to Fitch.

Franklin Templeton is ramping up a new collateralized loan obligation namedFranklin CLO III. The fund's latest deal is slated to be roughly $400 million, but a source close to the situation said deal size has not yet been finalized as all of the equity for the transaction has not been raised. The manager is ramping up assets for the leveraged loan structure and has warehoused roughly 50% of those assets so far. Issuance of notes for the deal is to take place in April or May following the current marketing period. Merrill Lynch will underwrite the notes. Officials at Franklin Templeton declined to comment and Merrill Lynch officials did not return calls.

Loan-participation funds continue to struggle under historically low LIBOR rates, defaults and write-downs on holdings, but according to investors an improving economic environment and the end of a deteriorating credit cycle offer some hope for the funds. The collective fund values have dropped from $27 billion in November to just over $20 billion last month, according to Lipper data, and there are not really too many positive signs yet, according to Don Cassidy, senior research analyst at Lipper. "I think we may have a few months of difficulty ahead," he added. Managers of the funds have experienced a torrid time for over a year with default problems coexisting with the onset of mark-to-market pricing (LMW, 11/5).

Traders say last week was extremely quiet in the secondary junk market, with most of the trading centered on new issues. Secondary spreads were flat overall through Thursday, the traders say.

Morgan Stanley and J.P. Morgan have filled the book on the $350 million deal for Steel Dynamics after a $200 million, seven-year senior subordinated bond offering and a shift from the pro rata to the "B" overcame some market reluctance. A banker said the "B" tranche was taken up by $30 million to $205 million while the $175 million pro rata dropped by $30 million. Pricing and the tenor on the bank debt stayed the same, he said. "Steel is not everybody's cup of tea," he noted.