Search results for

As volatility has increased since Sept.11, Jim Cusser, portfolio manager with Waddell & Reed Investment, has been buying negative convexity bonds, such as callable agencies and pass-through mortgages, on the assumption that volatility will pull back to more normal levels. Cusser says he has been buying $20 million in callable agencies and $30 million in mortgage-backed passthroughs for the past two weeks, representing a 7%, or $49 million, of its portfolio. He says he has done most of his move, although he may add an additional 1.5-2.0%, or $10-20 million more. The move was financed using new cash inflows.

Early this month Dutch officials said that a man had bought two bags of fish food with a euro banknote three months before the official introduction of single currency notes and coins. According to Reuters, the shopkeeper who accepted the money was quoted as saying he knew the note was not legal tender but accepted it because he thought it was "fun." Talk about a free-for-all.

David Killian, portfolio manager with Stone Ridge Investment Partners, says his firm will reallocate 8%, or $14 million of its portfolio, out of Treasuries into both mortgage-backed securities and corporates as soon as he sees evidence of an economic rebound. He anticipates that the move will be done early next year, triggered by jobless claims leveling off, a slight pick-up in manufacturing orders and a rise in consumer confidence.

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.

Deutsche Bank's asset-backed securities group has hired Bill Yeung as an ABS structurer, specializing in structuring ABS transactions, particularly home equity bonds, says Richard d'Albert, who heads the group in New York. Yeung, who last worked for Nomura Securities International in New York, fills a newly created slot, says d'Albert, although he declined to comment on additional hires.

Enron is in talks with its bank group and may make changes to its capital structure in order to resolve issues regarding the long-term liquidity of the company, after a nightmare week in which Enron's common stock price has plummeted and spreads on its debt widened. One banker said it is very likely that Enron will look to change the capital structure of its debt by issuing notes or offering equity. "It would be unusual for an investment-grade company like Enron to have such a large drawn-down credit facility," a banker said, explaining the company may need other sources of capital. It is still uncertain how Enron's situation will affect the sector, she added, though Enron is still an investment grade company and should have no problems tapping the markets.

A senior executive involved with BondBook, the dealer-owned online corporate bond trading platform, says the company will likely shut its doors by the middle of November. Layoffs of its approximately 100 employees are slated to begin soon, he says. He attributes the decision to a series of meetings held in mid-September, during which the company's dealer owners began to express misgivings about continuing to fund the venture in a post-Sept. 11 landscape. BondBook has been hurt by the well-documented liquidity problems in the corporate bond market, but its $3 million monthly cash burn rate is more to blame, according to the executive, who was involved in the technological development of the company. He continues that when dealers are visibly reducing headcount by up to 20% in some instances, it is difficult to ask them to continue to invest in a "continuing cost-center."

TD Securities, Credit Suisse First Boston, Bank of New York and J.P. Morgan are looking to complete a club-style syndication for a $300 million, delayed-draw term loan add-on for American Tower and TD is also seeking commitments to expand the existing facility of its Mexican subsidiary, American Tower de Mexico. Ann Alter, spokeswoman, said American Tower has an option to increase its current $2 billion in credit facilities by a further $500 million. The delayed-draw term loan provides the option to use the cash, but it may not necessarily be tapped, Alter said.

St. Louis-based Ralcorp, a maker of store-brand foods, rolled two credit facilities into a new three-year, $275 million revolver, led by BANK ONE and Wachovia Bank. Thomas Granneman, v.p., and controller, said Ralcorp had two facilities maturing in January and April next year. BANK ONE has been the lead bank for several years and Wachovia has also been a lead arranger for the company on the last few credits. Ralcorp did not put out to bid the lead arranger slots, but looked informally at several banks, Granneman noted, declining to name them. "There was a range in what the banks were offering," he said, declining to elaborate, but ultimately the existing relationships were most important. He declined comment on the spread on the old or new loans.

Regal Cinemas bank debt reportedly traded in the 102-104 range last week on news of the company filing for bankruptcy. While two dealers confirmed levels in that range, one said they were actually higher. However, he declined to give an exact level. The company filed in mid-October as part of a prepackaged restructuring program under which investor Philip Anschutz will take control of the company. Calls to Dick Westerling, head of investor relations, were not returned. The cinema chain is based in Knoxville, Tenn.

The calendar heated up substantially as pent up supply from September hit the market. Ford hit the market with a $3 billion transaction that quickly grew to $9.4 billion, the 5th largest corporate bond transaction ever done. Between the rating downgrades earlier in the week and the subsequent deal pricing, Ford spreads widened as much as 40 bp. Spreads tightened after the deal was priced as they did for the other jumbo of the week, BellSouth. The technical situation in the market steadily deteriorated, however, with dealers taking more and more paper in on swap. By the time the GM deal was announced after the close on Wednesday, secondary spreads were already under pressure. The GM deal sealed it with auto spreads and other high beta names widening 10-20 bp.

Wyndham International's "B" paper traded up to 81 from 78 last week as distressed buyers start to take an interest in the paper. Approximately $7 million changed hands. Traders also said that the credit has gone from being a par name and is now being traded by distressed dealers for the anticipated recovery. "Par guys are not in it anymore," said one. "Distressed players are making their bets on it." Dallas-based Wyndham manages 240 hotels. Richard Smith, cfo, referred questions to investor relations department which did not return calls.