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Moody's Investors Service downgraded the ratings for WKI Holding Company (World Kitchen) to Caa1 from B2 as the credit continues to actively trade in the secondary market. Approximately $617 million in senior secured credit facilities are affected. Moody's lowered the rating due to uncertainty of the company's restructuring plan. "They're closing down U.S. plants and trying to outsource manufacturing by going overseas. It's a big undertaking," said Nancy O'Connor, v.p. and senior analyst. "After they bought and merged EKCO and General Housewares, they must take the next step, which is closing plants to reduce overhead. It's uncertain whether they'll have additional losses." WKI, based in Elmira, N.Y., is a manufacturer and marketer of household products.

Tenneco Automotive's bank debt traded up to 85 from 77-80 last week on a more active distressed market and an improved sector. Approximately $5-10 million changed hands. Dealers reported that the automotive sector is stronger and that Tenneco's levels are up 15 points from where they bottomed out when the automotive sector crashed late last year. The Lake Forest, Ill.-based company manufactures shocks and struts as well as exhaust systems.

UBS Warburg, Morgan Stanley and Bank of New York held a bank meeting last Thursday for a $150 million senior secured revolver for Key3Media Group. The Los-Angeles based producer of technology tradeshows and conferences is refinancing debt via a proposed underwritten public offering that will wipe out $300 million of bank loans and $84 million of zero-coupon debentures. The three banks are also the lead underwriters of the note offering. Officials at the company did not return calls by press time.

No merger spelled lower levels for Lucent Technology, following an announcement late last week that it would not be merging with France-based Alcatel. Levels fell slightly to the 91 1/2 range. Dealers noted there continued to be strong supply. Lucent, based in Murray Hill, N.J., is one of the top manufacturers of telecom equipment and software. Calls to Lucent were referred to a spokesman, who did not return them.

Credit Suisse First Boston's $3.5 billion deal for Atlanta-based energy giant Mirant Corp. has been downsized to $3 billion and has had pricing flexed upwards. Project financiers predicted that the deal would be tough, suggesting that CSFB would have to tap most of the major power finance houses to get a package of this magnitude done. Recent construction revolvers from NRG Corporation and American National Power also proved tough sells.

Morgan Stanley this Friday will launch syndication of a $900 million credit for Fort Lauderdale, Fla.-based Extended Stay America, Inc. The credit comprises a $200 million revolver, a $50 million funded "A1"term loan, an unfunded $150 million "A2," and a $500 million "B" term loan. Extended Stay is also planning $300 million in bond issuance. The credit and notes are part of a refinancing of the existing $998 million bank debt, set to mature in 2002. The company, which provides extended stay lodging, had approximately $200 million available under the old credit.

Prison Realty's bank debt notched up a couple of ticks to 94 last week in a $5 million trade. Dealers said a need for paper that isn't in the telecom sector has helped support levels, but buyers and sellers could not be determined by press time. The company is based in Nashville, Tenn., and constructs and sells prisons. It also goes by the name Corrections Corporation of America. Calls to a company spokeswoman were not returned by press time.

Nick Casesa, a senior member of Barclays high-yield sales team, left late last month to join BNY Capital Markets in Roseland, N.J. He was at Barclays for just over a year, prior to which he worked at Prudential Securities, according to an industry official. Casesa reports toChris Harrison. Casesa and Harrison declined comment on the move. Jack Flaherty, head of high-yield and investment grade corporate bond trading at Barclays, says Casesa has not yet been replaced.

Stanfield Capital Management has reportedly upsized the collateralized debt obligation it has been ramping up over the last six months from its original size of $500 million to $850 million as available collateral for warehousing has become more available. Chris Pucillo, portfolio manager at Stanfield, declined to comment. "There was great demand from investors for the deal and they could find collateral that made sense," noted one market player familiar with the transaction. The vehicle was reportedly upsized a month ago to $750 million and then once again to $850 million a few days prior to pricing of the liabilities during the last week of May.

The $22 billion Arizona State Retirement System is seeking advisors to sell its $190 million commercial loan portfolio and to do so has issued a request for proposals. The portfolio is comprises investment-grade loans for non-residential properties in the state of Arizona. CIO Paul Matson said plan officials decided to sell the portfolio because it was not diversified enough, and chose to sell the entire portfolio rather then sell the individual loans because of a lack of liquidity in the market. He added the due date for the rfps is July 16, and that plan officials expect the portfolio to be sold by the end of the year.

A $25 million piece of USG Corporation's bank debt traded last week, with some dealers early in the week pointing to Bank of Tokyo-Mitsubishi as the seller. Dealers later noted that BTM officials had been asking around about the name to determine levels but did not move any paper. A BTM official remarked, "It's a rumor. Let's leave it that way." Levels were reported at around 60 and dealers attributed the shuffling of the $25 million piece to nervousness about the company's asbestos litigation. USG, based in Chicago, Ill., makes gypsum wallboard and sheet rock.

If theBasel Committee goes ahead with its proposed operational risk-based capital requirements, the Financial Services Roundtable warned in a May 31 comment letter, banks may shift asset management and other activities out of banks and into riskier non-bank affiliates. Furthermore, it said, for another kind of risk, credit risk, bank internal models are "simply not ready for use as a regulatory capital standard."