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Deutsche Telekom was scheduled to pay off $2.65 billion of VoiceStream Wireless' senior credit facility debt last week at par. "It hasn't happened as of yet," Casey Otley, assistant treasurer of VoiceStream, said last week as LMW went to press. "From VoiceStream's perspective, it's replacing our debt with an inter-company rate. From DT's perspective, it's retiring more expensive debt." Deutsche Telekom finalized the acquisition on May 31.

Dresdner Kleinwort Wasserstein is structuring a $1 billion synthetic collateralized loan obligations based on a reference portfolio of high-yield loans. According to Derivatives Week, an LMW sister publication, the CLO is due to hit the market early next month. Ebo Coleman, v.p. senior analyst in the structured finance group at Moody's Investors Service in London, said the agency has not rated any high-yield synthetic CDOs in Europe but is looking at several transactions and expects at least two to come to market before year-end. Officials at DrKW declined comment.

There is nothing to write about this week of note. The only deals were a two-tranche BBB offering from DPL on Friday (August 23), a $3 billion AAA 5Y for the European Investment Bank and a AA 7Y $750 million from the Province of British Columbia. That said, the market might soon be longing for more quiet days. Estimates of the forward calendar for investment grade corporates for the month of September are anywhere from $40-70 billion, with the wildcard the amount of commercial paper that Ford and GM look to term out ahead of possible downgrades in October.

Centennial Communications' $50 million term loan "C" add on, offered at 95 in syndication, may have pleased new entrants to the credit, but the discount to its 97 trading level presents a problem for investors. A banker familiar with the deal said that offering an add-on credit at a discount results in existing debt being marked down in portfolios. "Centennial is trading at 97, and logically if you can buy Centennial debt at 95 elsewhere and it is a similar security with a similar spread, you have to mark your own loans at 95. If a bank is holding a $5 million piece, then this is a $100,000 hit," the banker explained, adding nothing of this magnitude has occurred before with an add-on.

As defaults and bankruptcy filings continue to mount, the leveraged finance market is seeing not only a rise in debtor-in-possession loans, but also more non-traditional players such as insurance companies and collateralized loan vehicles investing in DIPs. Michele Kovatchis, senior v.p., corporate finance at Heller Financial, said that more CLOs, banks and insurance companies, such as Prudential and MassMutual, are participating, as they become increasingly comfortable and familiar with the DIP concept. Grace Healy, spokeswoman for Prudential's Capital Group, and officials MassMutual could not provide comment by press time.

Nextel Communications' bank debt notched up in a series of trades amounting to $15 million last week. Debt hit 93 3/4 then softened to 92 3/4 last week on news that the company would buy back some of its bonds and swap it for equity. The company announced early last week that it would cut about $857 million consolidated debt by repurchasing senior notes of its Nextel International unit. Citing a slow overall market, dealers said there was little fanfare over the uptick in levels. "It traded up a point or so. There's not that much activity in it," said a dealer. Calls to Mike Brittain, cfo, were referred to Joe Wilkinson, v.p. investor relations. He declined to comment on bank debt trading.

Premcor restructured its deal to address a tough pro rata market, and in turn upsized the original amount. The loan breaks down into two term loans, divided between $150 million and $500 million tranches. Jeff Beyersdorfer, v.p. finance and treasurer, explained the deal is structured differently than the existing credit to address a weak pro rata market and to ensure the credit would be fully subscribed. "We wanted to attract different investors," he said. "We were looking at the institutional market and targeted them for the $150 million [portion of the credit] because of the decline in the size of the pro rata market."

Remington Products signed a $110 million deal with Fleet Capital, replacing J.P. Morgan as the lead on its $95 million line of credit due to expire next June. Fleet won the lead after J.P. Morgan bid for the new deal. Al Castaldi, cfo, explained that the company had outgrown its $70 million deal and the $25 million add-on it secured last fall. He said refinancing was cheaper than going after another add-on. "We're a very seasonal business doing much of our business around Christmas and we had to put in something for the fourth quarter," he said. "Instead of another costly Band-Aid, we redid the whole thing." The Bridgeport, Conn.-based company sells various men's grooming products, namely shavers.

Market watchers are saying ring-fenced structuring could be what's driving up the price of Mission Energy's bank debt, which last week hit 98, trading up from the 96 level for new issue discount offered during syndication The $385 million loan closed more than a month ago and is priced at LIBOR plus 71/ 2%. Goldman Sachs and Lehman Brothers lead the deal. Ring-fenced financing ties bank risk to generating assets rather than the utility company itself, which can help a credit stay afloat even if the parent operations struggle.

State Farm Insurance has begun discussions with J. P.Morgan on the renewal of a 364-day, $2.16 billion credit line due in December, and if the facility is not renewed the company would seek an alternative form of protection. Dick Luedke, public affairs specialist for State Farm, declined to specify whether that would comprise reinsurance, catastrophe bonds or other alternatives. The existing revolver has a facility fee of four basis points and any borrowings would carry a rate of LIBOR plus 13.5 basis points. Currently no balance is outstanding on the facility, Luedke said.

Chattanooga, Tenn.-based U.S. Xpress Enterprises has selected SunTrust Bank to lead a $225 million refinancing credit with Thursday pegged as the launch date. Pete Vaky, managing director, head of loan syndications, confirmed the date, but declined further comment on the credit. A banker familiar with the deal said that a $150 million term loan "B" would be included. Pricing is likely to be LIBOR plus 23/ 4% on the $75 million revolver and LIBOR plus 33/ 4% on the "B." Calls to Ray Harlin, e.v.p., finance and cfo of U.S. Xpress, were not returned.