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Lyondell Chemical Company's "E" tranche traded just above 103 last week, down slightly from 103 1/2 about two months ago. "It's actually come off. The call protection steps down in a few months, and people are anticipating it," said a dealer. The company has call protection at 103 through June then 102 through June of 2002. The Houston-based company makes polymers that are used in synthetic trash bags, containers and sports equipment. Dealers have said the company has been an exception to the recent hit in the chemical sector.

CIBC World Markets is buying assets for a EUR800 million ($720 million) CDO, backed by a pool of European bonds and loans, as the European CDO/CLO market continues to develop. According to Bondweek, an LMW sister publication, the CDO will be managed by London-based Duke Street Capital, a private equity buyout shop. Some assets have been warehoused, and the manager is aiming to have 50% bought by the start of May when the deal closes. The deal, which is scheduled to price at month-end, is part of a wave of European CDOs signaling the market is finally starting to take off: first quarter CDO flow this year topped $15 billion, against the $2.5 billion recorded in the same quarter last year, according to Standard & Poor's.

Co-lead arrangers Citibank and Heller Financial are seeking commitments on a $115 million credit backing Carlyle Management Group's leveraged buyout of Key Plastics. The facility comprises an $80 million revolver piece priced at LIBOR plus 3 1/4% and a $35 million term loan "A" at LIBOR plus 3 3/4%. Heller is acting as the syndication agent and Citi is the administration agent. "The company is well structured, but coming out of bankruptcy, so the revolver is there for working capital," said a banker close to the deal. The covenants are still being worked on, but will be pretty strict, she added, hoping that commitments would be signed soon. Syndication was launched at a bank meeting March 28.

Comdisco, Inc. last week said it had drawn down roughly $800 million of its $1.1 billion deal, prompting market players to draw comparisons to Xerox Corporation's announcement last December that it had exhausted most of its $7 billion revolver. Comdisco's bonds quickly plummeted about 25 points, from 85 to 60. Unlike the Xerox experience, however, the bank debt did not follow suit. Traders said Comdisco's bank debt was holding steady in the 60-65 range and no trades were reported. Comdisco, based in Rosemont, Ill., leases electronic equipment. A company spokeswoman did not return calls for comment.

The week started out with a bang and then fizzled as equity market volatility took center stage. For the week ended April 5, a total of $12.1 billion in debt came to market, of which 87% was investment grade and the rest junk. That said, overall credit quality did deteriorate somewhat on the week as credit quality declined from A-/BBB+ to BBB+/BBB. There were no jumbo deals on the week, with the average deal size only $417 million, the second smallest reading of the year.

Moody's Investors Service has assigned a Ba2 rating to DaVita Inc.'s $425 million senior secured credit facility due to concerns over the cost of labor. Russell Pomerantz, v.p. and senior analyst, said retaining employees in lower level jobs of the health care industry is a challenge. "It's getting more difficult to attract and retain staff. There are better paying jobs where you don't have to poke and clean up after people," he said. DaVita, headquartered in Torrance, Calif., is a dialysis service for patients suffering from kidney failure. A company official did not return calls for comment. The credit is in syndication.

Bankers said general syndication closed last week on the highly demanded $820 million deal led by Morgan Stanley Dean Witter and Credit Suisse First Boston for First Reserve Corp. and Odyssey Investment Partners' leveraged buyout of energy equipment provider Dresser Equipment and the bond component of the deal was upsized last week from $250 million to $300 million. "The high-yield [bond] market is open for decent non-telecom issuers," noted one banker, explaining that the company decided to upsize the bond deal rather than increase the "B" tranche as increased demand for industrial paper resulted in attractive pricing for issuers. A banker noted the bonds were sold with a coupon of 9 3/8%--what he considered a "record" for a BB credit. First Reserve Corp. and Odyssey Investment Partners did not return calls by press time.

Bank of Tokyo Mitsubishi and Heller Financial have signed on as syndication agent and documentation agent, respectively, for Deutsche Bank's fully underwritten $150 million deal backing Chicago-based GTCR Golder Rauner LLC's leveraged buyout of credit card information processor Transaction Network Services. At last week's bank meeting, commitment fees were offered at 50 basis points across the board on the four-year, $20 million revolver and $30 million term loan "A"-- both priced at LIBOR plus 3%-- and on the $100 million, six-year term loan "B," priced at LIBOR plus 3 1/2%.

Covanta Energy Corp., formerly known as Ogden Corp., closed on a $146 million, one-year credit facility two weeks ago and will be looking to launch a new credit with a new group of lenders by the end of the year or the beginning of next year. Lou Walters, treasurer, explained that after a corporate restructuring the company consolidated its bank debt and set up the new facility to provide interim financing. "This loan won't see its maturity," said Walters, explaining that the credit replaces roughly 40 facilities the company had with over 30 banks to support its former aviation and entertainment businesses along with energy. Walters declined specify banks and pricing on the credit.

First Union Securities and FleetBoston Financial will increase to $425 million a revolver they syndicated for HRPT Properties Trust on a best-efforts basis to raise $400 million. The deal was oversubscribed by $100 million , and although it included an accordion feature that allowed it to extend the size up to $600 million if oversubscribed the banks and the REIT decided to set the line at $425 million, one banker said. "That was adequate capital for the company," he said. The REIT retains the option of expanding the line without lender approval for its full-term. The facility is expected to close in mid-April.

The price of W.R. Grace's bank debt dropped about five points to 45 as the company last week dragged lendersalong with their unsecured paper -- into bankruptcy. The move carries a particular sting for holders of the bank debt, as Grace had reportedly been talking to banks about a secured deal that would have put lenders in a much better position in the event of bankruptcy. "It hurts for them," one dealer said of the bank group. "It means the difference between a 75 to 80% recovery versus a 55-65% recovery. If the deal was secured, the group has some superiority in claims. Now they're up against everyone from payroll to the stationary store to the telephone company."

Greif Brothers chose Merrill Lynch to lead its $900 million credit backing its acquisition of Netherlands-based Huhtamaki Van Leer on the back of the firm's m&a advisory work. Ken Kutcher, cfo, said the company chose Merrill as its credit's lead arranger for the first time over Key Bank, its longstanding relationship bank. Kutcher noted that Merrill had familiarity with the transaction on the m&a side and more developed international expertise in general than its other lender. "The credit had international scope and we knew we would need international banks to be involved," he said. "We still have a strong relationship with Key Bank and I cannot say enough about their capabilities and support for the company," said Kutcher, explaining why Key Bank still participated in the credit as syndication agent. "They got second billing and we still wanted them to have a key leadership role," he said