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Loans offered at a discount in syndication are popping up more and more as lenders try to appeal to an institutional marketplace looking to make back some of the money it has lost. Original issue discounts (OID) help portfolio managers--particularly collateralized loan obligation managers--push up the average value of their portfolios. With institutional investors claiming the lion's share of new issues, OIDs are expected to gain steam, bankers said. "The trend is likely to continue," said Richard Carey, managing director at Credit Suisse First Boston. "The fastest growing segment of the institutional loan market is the CLO portion, and original discounts cater to their appetite."

Fleetwood Enterprises closed a $260 million deal late last month to replace notes, pay down other debt, and to finance operating expenses. Boyd Plowman, cfo, says this is the first credit facility of this size for the company, which had used $69 million in long-term notes before the refinancing. "We foresaw some covenant violations, and it came to fruition," Plowman explained, noting that the covenants on the bank deal are less restrictive. The Riverside, Calif.-based company is one of the leading distributors of recreational vehicles and manufactured homes.

A pair of sell-side analysts say Lucent Technologies' bondholders are too optimistic in the wake of that company's much discussed $1.9 billion convertible preferred offering. Basil Chaltas, portfolio manager at Lincoln Capital Management in Chicago, says he likes the deal because it provided the company with more financial liquidity while protecting the place of straight bondholdes within the capital structure. Still, Chaltas says he did not add to his position over concerns about Lucent's business plan. Last Thursday, the Lucent 7.25% notes of '06 traded up to $86. On July 30, before the deal was announced, they were at $80.

A $40 million chunk of Comdisco's bank debt traded last week as the bidding process for some of the company's assets drew objections from bidders. Deutsche Bank was rumored to be the buyer of the block, snapping it up in the mid-80s. Deutsche Bank officials declined to comment. Dealers said the wrangling over Comdisco's assets should translate into higher prices when they are sold. "It means more competition and makes the price go up, so it's a good thing," noted a market player.

The $100 million credit for Itasca, Ill.-based PrimeCo Personal Communications, led by Barclays and J.P. Morgan Chase, was filled last week, but only after pricing was jacked up 50 basis points to LIBOR plus 41/ 2%. Bankers familiar with the deal said original pricing of LIBOR plus 4% was considered tight and that progress was sluggish until the flex. Officials at Barclays declined to comment. The other banks that have signed up could not be ascertained. PrimeCo did not return calls.

High-yield and corporate credit market analysts expect spreads to narrow significantly by early next year, if not sooner. John Lonski, chief economist at Moody's Investors Service, says high-yield spreads could contract by as much as 100 basis points by early 2002. Lonski notes that corporate borrowing costs are extremely low. Three-month LIBOR, he says, is at its lowest point since February 1994, and is down 3% from a year earlier--the steepest year-over-year decline since 1992. He also expects issuance to decline as companies become more cautious in their use of leverage. These factors, he says, point to a decline in the ratio of downgrades to upgrades, and a narrowing of yield spreads.

Credit Suisse First Boston and J.P. Morgan Chase have been selected as joint lead arrangers for a loan backing Troy, Michigan-based Collins & Aikman Products Company's acquisition of Textron Automotive Company's trim division and refinancing of existing debt. A spokesman for Collins & Aikman said that approximately $1 billion of debt will be used to finance the $1.34 billion transaction, but he declined to comment on how the company will structure it between bonds and bank debt. CSFB, J.P. Morgan, Deutsche Bank and Merrill Lynch will be the banks involved, he said. The banks chosen for the financing advised on the transaction, the spokesman said. Calls to officials at the banks were not returned.

Credit Suisse First Boston is in the market with a $420 million refinancing for Addison, Texas-based beauty products seller Mary Kay launched on Wednesday. The debt consists of a $100 million, five-year revolver priced at LIBOR plus 31/ 4% with a commitment fee of 1/2%. There is also a $55 million, two-year asset-sale term loan priced at LIBOR plus 33/ 4% and a $265 million six-year term loan "B" with an outof-the-box spread of 33/ 4% over LIBOR. The new loan replaces a $515 million credit arranged in 1997, led by CSFB. Calls to officials at CSFB were not returned and pricing on the old line could not be ascertained. David Holl, cfo, was travelling and could also not be reached.

Deutsche Bank has hiredSteve Weinreich as an associate in its collateralized debt obligation distribution area in New York. Weinreich moves joins from Morgan Stanley, where he was a CDO research analyst. Michael Herzig, CDO distribution head and Weinreich's new boss, said Weinreich's job will consist of supporting sales for institutional clients in the U.S. and globally. "We have already closed seven [CDO] transactions this year and Weinreich's position was created to provide extra support in our post-closing efforts," says Herzig.

Aimee Evans has joined Société Générale's sales desk, starting last Wednesday, according to sources. Evans previously worked as v.p. loan syndications at Summit Bank. The bank was recently acquired by FleetBoston Financial and the department Evans worked for was let go with the merger, according to sources. Officials at Société Générale declined to comment, but a spokesman confirmed that Evans started last week and reports to Bob Barmore, managing director and head of loan sales. He declined to comment, while Evans could not be reached.

Jim Kochan, R.W. Baird's fixed-income strategist since 1991, has left the firm to join Strong Capital Management in Milwaukee in the new position of senior v.p. in the client services group. Kochan will be responsible for developing investment strategies for the firms fixed-income customers. He will report to Larry Zuntz, group chief, who is based in Chicago. Strong Capital Management has approximately $50 billion under fixed-income management. Prior to his tenure at R.W. Baird, Kochan was Merrill Lynch's chief fixed-income strategist, and was the first bond strategist picked for the Institutional Investor fixed-income research all-star team in 1989.