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The market for Calpine Corp.'s $750 million second-lien term loan may be starting to climb back up into the 90s, but the 12-point drop in the levels within weeks of allocation has left some investors pointing an annoyed finger at Goldman Sachs, the sole lead arranger for the $3.3 billion debt transaction. Investors complained that the deal was increased by too much, that Goldman stuffed accounts full of the paper and did not support the new deal in the secondary market. "Clearly, there was disconnect between how the deal was marketed to us and how the deal was completed," said a buysider. But some investors admitted that the economic impact is the real source of the complaints. "Honestly, we're not happy because we lost money," said another investor. An official at Goldman declined to comment. Calls to Steve Hickey, head of Goldman's U.S. loan trading team, were referred to a loan sales official, who did not return calls by press time. Rick Barraza, Calpine's v.p. of investor relations, declined to comment on the story.

Leap Wireless International's vendor-financing paper has traded up as the company winds up bankruptcy proceedings. A $13-15 million piece of the loan was auctioned off two weeks ago this Friday in the 42-44 range, said traders. The seller was said to be one of the original holders of the paper. Last year about $300-400 million of this paper changed hands as low as the high teens (LMW, 11/02). The vendor-financing debt has since been slowly creeping up, particularly over the last month. The company should emerge from bankruptcy soon, financial results have been improving, and Leap is closing under-performing markets, which frees up spectrum that can be sold, one investor said.

Lehman Brothers launched syndication last week of a $200 million credit to help back B&G Foods' acquisition of Nestle Prepared Food Co.'s Ortega brand for an undisclosed amount. A banker said the credit includes a six-year, $150 million "B" loan priced at LIBOR plus 31/2% and a five-year, $50 million revolver priced at LIBOR plus 31/4%. The deal will also go toward refinancing existing debt, he added. The existing $280 million credit includes a $70 million "A" loan, a $150 million "B" piece and a $60 million revolver. Lehman also leads this deal, which helped back B&G's acquisition in 1999 of The Heritage Portfolio of Brands from The Pillsbury Co., Indivined B.V. and IC Acquisition Corp. for $192 million. A Lehman official declined to comment.

State Street Research & Management is considering bringing its floating-rate fund strategy to the retail level. The move is designed to protect investors against rising interest rates. State Street aims to capitalize on the solid track-record it has had with this offering on the institutional side, said Mark Marinella, chief investment officer, fixed-income. The Boston manager now offers the LIBOR Plus Strategy and Enhanced Cash portfolios to institutional clients. Indeed, many fixed-income managers are bracing themselves for the looming end of a long bond rally. A floating-rate strategy has been regarded as an effective hedge against rising interest rates, but only a handful of fund companies offer them directly to retail clients. In fact, there are almost no no-load shops who offer these types of investments, fixed-income managers said. "It's not that well known. You need someone, an advisor, to talk about it," said Payson Swaffield, v.p. and co-portfolio manager of the Eaton Vance Floating Rate Fund. Eaton Vance was among the first managers to peddle a floating-rate fund on the retail level. Swaffield said the fund has seen a year-to-date spike in assets, but declined to be more specific.

Warburg Pincus received a welcome reception from the debt markets when raising $695 million in funded debt for its acquisition of TransDigm Holding Co., said Kewsong Lee, managing director at Warburg Pincus. The "B" loan was flexed down 75 basis points and the size of the notes offering was increased after investors favored the structure and pricing, added James Neary, also a managing director at Warburg Pincus.

Merrill Lynch has priced the notes for Franklin Templeton Investment's fourth collateralized loan obligation, the $306 million Franklin CLO IV. The $256 million triple-A tranche is priced at LIBOR plus 55 basis points, said a source. A Merrill Lynch spokesman declined to comment, noting the deal is a private placement. Richard D'Addario, senior portfolio manager at Franklin, was traveling. A spokeswoman did not return calls. The deal is said to have been initiated after reverse inquiry from equity investors in the firm's previous deals (LMW, 4/27). One investor said none of the firm's three previous CLO deals have been downgraded, while the equity returns have been north of 20%.

Owens Corning's bank debt slipped into the 60-62 range from the 65 level last week after the company filed its third amended joint plan of reorganization. The new plan does not provide a proposed settlement value to bank debt lenders for their claims to certain subsidiary guarantees. The basis of the Owens Corning plan calls for substantive consolidation. If the company succeeds in its consolidation efforts, all the assets of the company will be thrown into the same pot to be distributed among the creditors. Lenders' claims to the guarantees would have provided the group with a higher recovery.

The outstanding debt for the new Graphic Packaging Corp., which was recently formed from a merger between Graphic Packaging International Corp. and Riverwood Holding, provides the combined companies with interest rate savings of about $30 million over what they had been paying separately, said Bruce Kirk, Graphic's v.p. of investor relations. The debt backing the merger includes a new $1.6 billion credit, $425 million of 81/2% senior notes and $425 million of 91/2% senior subordinated notes.

Lon Pastuch left Miller Tabak Roberts Securities earlier this month. Pastuch was hired in 2001 to set up the company's distressed loan trading business. The circumstances around his departure could not be determined and Pastuch declined to comment. Joel Miller, Miller Tabak's senior managing director and chief operating officer, confirmed Pastuch's departure. He said the firm is continuing in the loan business, but declined to elaborate.

Wachovia Securities and Bank of America launched syndication last Thursday of a $175 million refinancing credit for Atlanta-based Per-Se Technologies. The credit includes a $125 million, five-year "B" loan and a $50 million, three-year revolver. Proceeds from the deal will go toward refinancing $160 million of outstanding 91/2% senior notes. Exact pricing could not be confirmed on the facility, but the company said in a release that it expects that the new debt will have interest rates in the 5-6% range. In April of 2001, Per-Se completed a $50 million revolver led by GE Capital, priced at LIBOR plus 21/2%. Wachovia and B of A bankers did not return calls.

GE Capital and Lehman Brothers wrapped up a $270 million recapitalization credit for subsidiaries of Tempur World Holdings last week after introducing a pricing grid to the deal. A banker explained that the six-year, $135 million "B" loan is still priced at LIBOR plus 31/2%, as it was when syndication launched. But pricing can step down to LIBOR plus 31/4% if leverage goes below 3.5 times and pricing can go to LIBOR plus 3% if leverage goes below three times, he explained. The mattress and pillow manufacturer presently has debt-to-EBITDA multiples of about four times, he noted.

The Mills Corp. has completed a $500 million credit that helped finance the acquisition of Del Amo Fashion Center and Great Mall of the Bay Area. "The new facility increases financial flexibility and allows The Mills to seize opportunities to grow," said Noam Saxonhouse, v.p. of investor relations for the Arlington, Va.-based real estate investment trust. "If you have the chance to get increased financial flexibility at a low rate, there is no reason not to," he stated. In addition to its recent acquisitions, the company is certainly looking at other opportunities to expand, noted Saxonhouse. "The Mills has a very active development pipeline and an active acquisitions program," he added.