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Cavanaugh Capital Management (CCM) will begin buying corporate bonds for its portfolios for the first time since 1994, in an effort to pick up additional yield. Megan Brune, portfolio manager at the Baltimore-based firm, says CCM will seek to allocate up to 5% of money currently under management to corporates, selling Treasuries in accounts with high Treasury exposure. CCM may also allocate up to 10% of incoming money to corporate bonds. Brune says CCM expects $40-145 million in new money over the next three months.

Loan Market Week thanks all those who sent Christmas cards, but special mention must be made to Santa and helpers at the HypoVereinsBank loan syndication team. For the second year running, they sweep the LMW award for best greetings card with a picture of the fresh-faced bunch wearing Santa hats with the tune of Happy Holidays To You in the background. Last year they dressed as elves.

Burlington Resources in Houston, which has recently issued USD1.5 billion in fixed-rate debt, is being bombarded by calls from bulge-bracket investment firms pitching interest-rate swaps following its purchase of Canadian Hunter Exploration earlier this month. "Numerous banks are pitching us deals. The phone is constantly ringing," said Dan Hawk, v.p. of the treasury.

Deutsche Bank and Credit Suisse First Boston held a bank meeting last Wednesday, looking for managing agents in a $1.25 billion bank deal refinancing a $1.75 billion PanAmSat note, currently provided to the company by General Motors. The $1.25 billion credit is part of a series of financings, connected to acquisitions by EchoStar Communications. The credit is split between a $250 million revolver, a $400 million term loan "A" and a $600 "B" loan with pricing on the pro rata at LIBOR plus 23/ 4% and 31/ 4% over LIBOR on the "B" tranche. "This is one of the ways General Motors is getting cash," a banker said.

CoreComm is attempting to expand its J.P. Morgan-led credit facility after deleveraging the balance sheet through an exchange of debt for common stock. An official with the company, who declined to be named, said CoreComm is currently in talks with J.P. Morgan to increase the $156.1 million facility, though he would not say by how much. The credit facility expansion is part of an ongoing process to recapitalize CoreComm. The official declined to comment on whether the facility will be used to pay down bonds or other debt securities.

Dynegy bank debt swooned from par to 85 last Tuesday shortly after its debt was downgraded. By week's end some traders said bids had edged back up to the high 80s, but players were taken aback by the initial drop. "[Fifteen points] is a pretty big hit," a dealer said, noting the credit had consistently been a par name. Moody's Investors Service notched the debt down to Baa3 from Baa2 because of concerns over power sector pricing pressures, and Dynegy's legal tussle with Enron following the failed takeover.

Global Crossing bank debt skidded down to the high 20s last week, from the 34 range, on speculation the company will file for Chapter 11 protection. As LMW went to press late last week, there were no reports of a filing. Approximately $20 million traded over the week in a number of small trades, according to some, although one dealer questioned whether that much had moved. J.P. Morgan and Goldman Sachs are reportedly active in the name, but officials at both shops declined to comment. Calls to Dan Cohrs, cfo, were not returned. Spokesman John Schmidt declined to comment on trading levels and the company's financial position.

Brian Hannon, a senior high-yield trader, has left Bear Stearns, according to another trader there. A senior high-yield trader at a rival firm says Hannon was laid off because, though he had been there for several years, he had been there for the shortest tenure among Bear Stearns' senior high-yield traders. He says Hannon traded cable, energy and some telecom credits. Hannon, who worked at Scotia Capital Markets prior to joining Bear Stearns, could not be reached. Art DeGaetano, head high-yield trader at Bear Stearns, declined comment.

Washington, D.C.-based MeriStar Hospitality, the owner of upscale hotels, is paying off its term loans "A" and "B" with a $250 million senior note offering to replace the bank debt with less restrictive longer-term debt. Bruce Riggins, director of finance said the company is making a move because, "bank debt is more restrictive in terms of covenants. The consequences of 9/11 made MeriStar out of compliance and at the mercy of the banks in terms of fees and going after collateral." He explained the goal was to reduce bank debt to 10-15% of total debt. "They [the bank group] are understanding, but had an opportunity to make money through non-compliance. The risk was of being at the banks' mercy," Riggins reiterated.

Mosaic Group extended the maturity of its credit facility to 2004 and reduced the commitments as the company anticipates a tougher market. "It just cleans and tidies things up in this environment," said Ben Kaak, executive v.p. and cfo. He explained that the company wanted to extend the maturity in light of what could be a tough market in the next couple of years. In exchange, Mosaic's deal was reduced to $300 million from $400 million and the pricing was increased to 215 basis points over LIBOR. Pricing had been 140 basis points over LIBOR.

NationsRent's debt was quoted in the mid-50s following an announcement early last week that the company had filed for Chapter 11 protection. The company announced last Monday that it had filed in an effort to restructure its debt. The company also obtained $55 million of debtor-in-possession financing led by FleetBoston Financial. Ezra Shashuoua, cfo, did not return calls for comment. Mark Baker, spokesman, confirmed that the company is restructuring its debt. "They have not filed a plan with the court. However, they're working closely with the banks on that and in due course will submit it to the court," he said.