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On the view that the Federal Reserve Board may have to ease further, causing the yield curve to steepen, David Kotok, chief financial officer with Cumberland Advisors, is emphasizing an inflation management strategy by swapping out of taxable municipal bonds into Treasury Inflation Protected Securities.

Bank Leumi USA will shorten duration by 0.5-years over the next two months on the view that the economy is bottoming out. Robert Giordano, portfolio manager of just under $2 billion in taxable fixed-income at the Manhattan-based subsidiary of Bank Leumi le-Israel, says the Bank will exchange fixed-rate securities or floaters, to hedge against a sudden rise in interest rates.

It's slooooooow. Many dealers were yawning last week as the slowest month for trading kicked off. Between the hot weather and quiet market, seems the foremost thing on their minds lately is taking it easy. One market player said half of his senior staff was out the door at 2:30 one afternoon last week. "I was yelling at them, 'Is this a holiday and no one told me about it?' They said they were off strategizing. I said, 'What, you were strategizing on a train to Connecticut?" Others were able to slip out with little fanfare. "I went for a three-hour lunch break today," a trader said, adding no search and rescue teams were dispatched for him.

First Union launched last Friday syndication of a $240 million credit for DRS Technologies, backing the company's acquisition of the Sensors and Electronic Systems business of The Boeing Company. Parsippany N.J.-based DRS, a defense electronics company, is buying SES for $84 million and is wiping out an existing $160 million loan with Mellon Bank arranged in 1998, noted Richard Schneider executive v.p., treasurer and cfo of DRS. Mellon will be on the new credit, Schneider noted, but he declined to say which other banks will be involved or why First Union was chosen to lead.

Radnor, Pa.-based Airgas has completed a $625 million debt refinancing package comprising a $225 million senior subordinated note offering and a new $400 million five-year unsecured revolver via Bank of America. Joseph Sullivan, treasurer, noted that the loan and notes combination was necessary to get the deal completed in an increasingly difficult bank debt market, with fewer banks around and revolvers harder to obtain. The old $790 million revolver, also led by B of A, was set to mature at the end of the year. Reduced by $150 million through a receivables program, the $400 million that was drawn will be taken out by the new financing, explained Sullivan.

After a slight recovery, Global Crossing's bank debt traded down last week and landed in the 92 range, which is down from 94 less than a month ago. The credit is continuing to drop on a weak telecom industry. "The bids were as low as 87 a few weeks ago," a dealer noted. "People are still freaked about telecom." Global Crossing's bank debt plummeted 10 points in mid-June, dropping from 97 to 87 in a single week. Calls to the company were referred to a spokeswoman, who did not return them.

Moody's Investors Service assigned a B1 rating to Rockwood Specialties Group's $570 million senior secured guaranteed credit facility because of the company's high leverage. The credit was launched into syndication this month. Diane Vargas, v.p. and senior analyst at Moody's, said high leverage is the main driver of the rating. "Even without considering the senior discount and (payment in kind) notes, they have very high leverage," she said. The Princeton, N.J.-based company is a global producer of specialty chemicals, including additives, specialty compounds and electronics.

BNP Paribas and First Union's $400 million credit for Hyatt has received approximately $300 million in commitments, including $50 million pieces from First Union, BANK ONE and Firstar Bank. J.P. Morgan Chase, the documentation agent, has also committed $75 million, noted a banker. BNP Paribas is syndication agent and First Union is administration agent for the deal, split between a three-year, $300 million tranche and a 364-day, $100 million tranche. All-in drawn pricing is tied to a grid opening at LIBOR plus 70 basis points. Commitment fees for $35 million and $25 million pieces get 20 basis points and 17.5 basis points, respectively. Officials at First Union and BNP Paribas declined to comment. Calls to officials at Hyatt were not returned.

HypoVereinsbank last week priced a E1.5 billion collateralized loan obligation with a bulked up roster of managers, a strategy that may become more common as CLO investors grow increasingly concerned about the liquidity of CLO paper. "A lot of clients like to see perceived liquidity and more of them are asking for more names," said Chris Tessler, head of institutional sales at HypoVereinsbank in London, explaining why J.P. Morgan, Credit Suisse First Boston, Bear Stearns, and UBS Warburg co-led last week's Gelidilux 2001-1. Tessler said clients are tired of firms buying deals without creating a market for them. He said the balance sheet deal would have been a tougher sell to bond investors without other names on the book and he expects more CDOs and CLOs, domestic and European, to have an increasing number of banks leading deals. Tessler noted that typically a deal the size of Geldilux would have been executed by one or two firms.

Moody's Investors Service has placed Station Casino's ratings on review for possible downgrade, affecting $1.4 billion of debt, including a $300 million credit facility rated Ba1. The potential downgrade is due to leverage concerns and a planned share repurchase agreement of 10 million shares at a cost of approximately $125 million. However, Moody's also noted that Station is one of two dominant players in the Las Vegas locals market and that Las Vegas is one of the fastest growing markets in the U.S.

A National Association of Securities Dealers panel has ruled against Credit Suisse First Boston in several key elements in the case of Rogers v. CSFB. The case centers on issues relating to the alledged wrongful termination of two ex-CSFB junk traders, Brian Rogers and his supervisor, desk chief Sal Abbatiello, in marking over $150 million worth of bonds in 1998 (BW, 8/6). Hearings to determine the amount of damages have yet to be scheduled. Rogers is represented by Jeffrey Liddle, of Liddle & Robinson in New York, who declined comment, citing the upcoming hearings.

Citigroup closed a $350 million balance sheet collateralized loan obligation after notes priced for the deal last week. Bankers said Salomon Smith Barney sold the notes to investors last week to fund the balance sheet vehicle, named Project Securitization Company Ltd. 1. The special purpose vehicle will securitize project finance loans made to the telecom, petrochemical, and power sectors. The portfolio comprises 25 different loans without any one sector dominating the portfolio by more than 10%. A banker noted that only a handful of project finance based CLOs have been structured prior to this deal.