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Lehman Brothers is reshopping an overhauled credit for TSI Telecommunications Services with new pricing and a combined term "A" and "B" loan, after a tough reception by investors. The $100 million senior secured term loan "A" and $200 million term loan "B" will be priced at LIBOR plus 4 1/2 %-- a 1% hike on the original spread. The spread on the $35 million revolver has also been raised to 4 1/2 % said a banker. A $245 million bond offering has been completed, but pricing could not be ascertained, added the banker. Call protection was added in at 102/101 during the first tweaking last month, a rework that also included a price flexing (LMW, 1/21). Lehman bankers did not return repeated calls.

Deutsche Bank's $70 million deal for tabletop sweetener-company Merisant blew out last week only days after launching. The add-on credit for Merisant, whose products include Equal and Canderel, was launched last Tuesday, said an official familiar with the situation. "This is a credit people knew with strong brand names," he said. Pricing is still at LIBOR plus 3 1/4 % for the five-year term loan "B" and had not been flexed prior to press time. The new financing is aimed at paying down higher intereset subordinated debt incurred in the leveraged buyout by Pegasus Capital Advisors in March 2000. The business was purchased by Pegasus from Monsanto, which had decided to concentrate on its pharmaceutical and agricultural products business.

Merrill Lynch has begun to send credit derivative structurers along with asset-backed bankers when pitching deals to potential issuers. The objective is to provide a one-stop-shop for securitization, since these deals frequently include derivatives, according to a Merrill banker in London. The derivatives team will handle smaller deals, while larger deals will be the purview of the securitization group.

Credit analysts are worried that proposed changes by Moody's Investors Service to its ratings methodologies could have a negative impact on the European corporate credit market. Late last month, Moody's announced it may shorten ratings reviews, permit more responsive actions to market news, change ratings without formal review and streamline the process for establishing ratings outlooks--perhaps eliminating them altogether. Calls to Christopher Mahoney, senior managing director and chairman of Moody's credit policy committee and author of the report, were not returned.

Morgan Stanley is growing its global fixed-income strategy team under Amy Falls, who heads the group out of New York. It has added Carlos Nogueira, a principal who previously did quantitative research in emerging markets and high-yield at the firm, to its global fixed income strategy team. Falls says the group is also looking for a candidate with strong writing skills to help her craft a weekly 10-page research piece. The firm may hire at the v.p. level, though it could also employ a less senior candidate to grow into the position. Nogueira says his new role will have a global focus across asset classes. His previous position has been eliminated.

Two par name staples bounced around last week, dropping early and then recovering late in the week. Nextel Communications traded down to 88 from 89 1/4-90 1/2 in a small $2.5 million trade Wednesday. But by Thursday, Nextel began to climb to 88 3/4 early in the day and later $2.5 million traded at 89 1/16. Another $5 million of Nextel traded at 89 1/4 in the late afternoon, said one dealer.

The Houston Texans will be looking for a lead bank for a possible $300 million refinancing in the form of either a bank deal, a private placement or a combination of the two by next year. J.P. Morgan leads the current $225 million bank facility, but the Texans need an extra $75 million to pay the National Football League next January, and according to Scott Schwinger, cfo of the Texans, the debut season would be a good time to extend the maturity on the existing debt. "J.P. Morgan has a strong seat at the table, but we will talk to other folks as well," stated Schwinger.

Patriarch Partners, a New York-based distressed bond investment management boutique, is strengthening its structured finance effort and has hired three collateralized loan obligation analysts for this purpose. All new hires take newly created slots, according to Lynn Tilton, principal.

Deutsche Bank and Credit Suisse First Boston's $1.25 billion deal for PanAmSat is on the cusp of filling up and allocations are expected this week after a strong bond offering kick started the syndication. One banker noted half the deal was spoken for before the bond offering, but the pricing of the bonds provided a pointer to the relative value in the bank debt and a subordinated cushion, enabling cautious buysiders to commit. Some investors were waiting to see what would happen with the bonds before committing, said the banker.

Roughly $20-30 million of Pacific Gas & Electric's bank debt traded above par last Thursday, creeping up from 97-98 after the market digested an 8-K filing from the company that included an accrued interest provision on its existing debt. Traders said Deutsche Bank and Merrill Lynch were involved in the trades. Levels on the debt reportedly climbed to the 101 1/2 102 1/2 range on the letters of credit and the 101-102 range on the revolver. Traders explained the surge in the debt levels came from optimism surrounding an expected approval of a provision in the company's Chapter 11 reorganization plan that would give Class 5 General Unsecured Claims accrued interest on their investment. "The claim is fully covered, you're not going to take a discount on your principle," explained one trader. Officials at Deutsche Bank and Merrill declined comment.

Last weekFitch Ratings downgraded two tranches of the liabilities of Pilgrim Investments' collateralized loan obligation, Pilgrim CLO 1999-1, removing them from credit watch negative. A $60 million class B tranche has been downgraded from BBB+ to BBB- and a $10 million class C tranche from BB+ to BB-. Michele Zacharias, analyst at Fitch, said the current downgrade reflects increased levels of defaults and deteriorating credit quality of underlying assets.

Shoney's replaced Bank of America and other lenders on a $135 million credit for its subsidiary Captain D's with a private equity fund that is hooking up with the company.Lone Star Funds has a merger agreement with Shoney's pending and the fund has taken out the bank debt as part of the union. The fund's new role as lender on the credit, which was given an extension by banks until March, eliminates Shoney's plans for a bond deal to take out the debt originally set to mature in December 2001. Shoney's, under pressure from banks and rating agencies, had been considering a bond deal heavily backed by Captain D's assets to raise capital to pay down the line. "We were looking for longer-term financing and then there was a change of plans when [Lone Star] came in," said Ernie McDaniel, Shoney's treasurer. Calls to officials at Lone Star Funds were not returned.