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David Walker has resigned from J.P. Morgan Securities where he was co-head of U.S. high-yield research, according to a colleague. The reason for his departure could not be determined. Walker did not return calls placed to his office or his residence. A former colleague says he has decided to do something "sort of" like a hedge fund, but would not be more specific. It could not be determined whether J.P. Morgan plans to replace Walker. One firm official says that Doug Conn, the other co-head of U.S. high-yield research, is currently the sole head. Walker reported to Chris Linneman and Peter Schmidt-Fellner, co-heads of high-yield, both of whom did not return calls.

XL Capital Assurance, a New York-based financial guarantor, has hired two securitization veterans for its consumer asset securitization group. Seleena Baijnauth joins as a senior analyst from J.P. Morgan Securities where she reported to Matt Whallen, v.p. in charge of home equity ABS. Lima Ekram joins as a v.p. from Financial Guarantee Insurance Company (FGIC) where she reported to David Steel, managing director and head of mortgage-backed securities, says Mitch Karig, a spokesman for XL. Both will report to Peggy Wallace, managing director and head of the group. Karig says that Ekram will be managing MBS transactions while Baijnauth will analyze transactions for all asset classes. Both are newly created positions, and Karig says the new hires reflect growth in XL's consumer asset securitization group, currently comprising five people. No additional hires are planned at this time, he adds.

Sunrise Assisted Living issued $125 million in new convertible bonds last month to pay down $92 million in bank debt that the company used to redeem $150 million in expiring convertible notes. Sunrise received commitments from Credit Suisse First Boston, Wachovia Bank, and FleetBoston Financial for the $92 million term loan while giving investors a 30-day notice regarding the redemption, said Charles Post, senior v.p., corporate strategy and capital markets. The company decided to take advantage of comparatively better pricing with a new convertible deal rather than holding onto the bank debt for future funding.

Wachovia Securities and Jefferies & Co. are working on several collateralized loan obligations consisting of loans issued by middle market specialty lenders. CLO players say the market may see more issuance given originators' eagerness to find cheaper sources of funding at the attractive LIBOR levels.

UBS Warburg has added veteran mortgage-backed securities analyst Laurent Gauthier to its securitized research team in New York. He will be a director and report to Laurie Goodman, securitized product research chief. Gauthier joins from Banc of America Securities, where he was a v.p. reporting to mortgage research chief Sharad Chaudhary. Goodman says Gauthier was a good fit because he has analyzed and modeled a variety of securitized products, including adjustable-rate mortgages and home equity loans. The slot opened up when Phillip Millman, who had been the group's ABS analyst, transferred internally to the firm's information technology group.

The oversupply of fund money relative to the availability of paper in the loan market is more likely to benefit companies with rated loans than unrated ones, leading to cheaper borrowing costs. "Only companies with rated loans benefited from a downward flex in market pricing last year, while unrated loans were much more likely to have pricing flexed upwards at the expense of the company," noted Steven Bavaria, director of Standard & Poor's and head of its loan rating business. "Corporations with rated loans were able to save millions of dollars in interest costs last year, as they benefited from downward pricing using market flex pricing clauses," Bavaria stated. Not one unrated loan was flexed down last year, and 24% of unrated loans were flexed up.

The market for WorldCom's bank debt was widely disputed last week with traders pricing the paper at bid/ask spreads from 96 1/498 1/4 to 97 1/299, and no trades completed. Discrepancy over appropriate levels for the name have come from reports that the Securities and Exchange Commission is investigating the company's accounting practices. One trader asserted that the correct range was "definitely not in the 96s", while another said 99 was too high. Standard and Poor's affirmed the company's BBB+ rating in its February 11 statement, but changed the outlook from stable to negative. This change comes with concerns that the economic and competitive conditions of the current telecom market could hinder the company's efforts to deleverage in the near term. WorldCom is a global company located in more than 65 countries providing internet, as well as voice and data services. Scott Sullivan, company cfo, could not be reached by press time.

Robert Chambers, a former high-yield energy analyst in the Houston office of Lehman Brothers, and number two in his sector on the Institutional Investor 2001 All-America Fixed-Income Research Team, has left the research group to start a hedge fund at the firm. Energy analysts at other firms say he had wanted to start a hedge fund for some time, and offered Lehman the option of having him start the fund internally or on his own. Chambers referred further questions to Bill Ahearn, a firm spokesman. Ahearn did not respond to questions by press time last Thursday.

Lehman Brothers is launching a $1.225 billion bank deal for Tesoro Petroleum in New York on March 20, with a $750 million "B" tranche included in the package. "The funds are partly new money backing the acquisition of the Golden Eagle refinery from Valero Energy and also refinancing debt from the financing backing the BP refineries buy last fall," said one banker familiar with the transaction. The loan will include a $225 million revolver and a $250 million "A" term loan. Pricing on the pro rata is LIBOR plus 21/ 2% and LIBOR plus 3% on the "B". The "B" will retain the LIBOR floor instituted on the BP transaction, designed to assuage the fears of loan-participation funds suffering from the record low LIBOR rate (LMW, 10/14).

Morgan Stanley is reportedly talking about packaging commercial mortgage-backed securities backed by single asset and large loan deals, according to BW sister publication Real Estate Finance & Investment. Single asset deals--almost always backed by trophy assets--have been viewed as much riskier in the wake of Sept. 11. Jon Strain, managing director at Morgan Stanley, did not return phone calls seeking comment.

Orbital Sciences, a Dulles, Va.-based developer of space systems for commercial and military purposes, switched from J.P. Morgan to Wells Fargo subsidiary Foothill Capital, and Ableco Finance to lead its new three-year credit lines. Barron Beneski, responsible for investor relations at Orbital, said the new lines, composed of a $35 million receivables-based revolver and a $25 million term loan, will be used for short-term liquidity purposes. The previous J.P. Morgan-led credit was paid off last year when Orbital executed a turnaround strategy. Debt reduction was a component of the strategy, he noted. Beneski declined to give specific reasons for the switch.

The Royal Bank of Scotland is looking to add two credit analysts to its London-based European research team, according to a bank insider. The team currently has seven analysts and will add a utilities specialist and a strategist, he says. The additions are being made to meet the demand of new business coming from Europe. RBS recently began to expand its debt capital markets business outside the U.K. into France and Spain (BW, 1/6, 1/13).