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Interstate Bakeries Co. is asking its bank group for amendments to its credit facility as sharp declines in operating results pressure leverage levels and limit liquidity. Proposed bank facility amendments will give Interstate a more comfortable EBITDA cushion, but the company will have to substantially deliver on a restructuring plan to remain within the new proposed covenant levels, according to Moody's Investors Service. Calls to Frank Coffey, senior v.p. and cfo of Interstate, were not returned by press time.

Bank lenders were being rolled into Kmart's $200 million "B" piece that was originally set aside for institutional players after buyside commitments left the tranche short last week. GE Commercial Finance, Bank of America and Fleet Retail Finance were allocating the $2 billion exit facility to mostly agent round lenders. A banker familiar with the deal would not comment on the level of institutional "B" loan commitments, but he noted that the credit was not like a normal leveraged deal because pricing for the term loan and the $1.8 billion revolver were the same at LIBOR plus 31/2%. The term loan was implemented for the "B" player's benefit, he said.

Andrea Labonte, a v.p. in leveraged finance at Bear Stearns, left the firm last month. A Bear Stearns spokeswoman confirmed her departure, but did not know details regarding her future plans. A person familiar with Labonte's situation said she is out of the loan business, at least for awhile. Labonte joined Bear Stearns in 1999 after working at NationsBanc Montgomery Securities and Bank of America previously. Bram Smith, a senior managing director in leveraged finance at Bear Stearns, joined the firm earlier this month after Labonte had departed (LMW, 4/14). Labonte could not be reached for comment.

Merrill Lynch Capital and Citigroup last week offered more bait to lure investors into Carlyle Management Group's $325 million acquisition credit for Breed Technologies, but tickets still came up short. The lead banks cut the size of the deal, threw in an original issue discount and boosted the coupon, but were still looking at a post-close selldown as they moved to wrap up the deal last Friday. The credit had to close and fund last week for the acquisition of the airbag, steering wheel and seat belt company to stay on schedule.

Standard&Poor's (S&P) dropped the Republic of the Philippines' foreign currency rating yesterday (Thursday). The downgrade from BB+ to BB comes six months after the agency reduced the sovereign's rating outlook to negative. It also comes two days after the Philippine government announced that the budget deficit for the first three months of the year was Ps58.9bn, nearly 7% wider than the Ps55.2bn target.

Australia Credit Suisse First Boston and Deutsche Bank yesterday (Thursday) launched the latest global securitisation for Australian lender Members Equity. The non-bank lender has now raised $5.8bn from offshore investors in four offerings.

As the infection rate of the severe acute respiratory syndrome (Sars) rises across Asia, regional economies and capital markets, as well as individuals, are feeling the effects. The Asian bond market has been no exception. Despite a strong and growing pipeline, concerns abound that it will be hard to translate interest into reality. With masked pedestrians staring out from newspaper front pages and television screens, and infection rates and death tolls still rising, global sentiment towards Asian issuers is deteriorating.

AUSTRALASIA Australia

Westfield Trust became the latest Australian real estate investment trust to tap the equity capital markets, raising A$200m on Wednesday evening. Westfield has already spent almost A$700m this year, paying A$390m for Sydney Central Plaza from Coles Myer, and A$290m for 19.9% of AMP Shopping Center Trust.

Singapore Telecommunications has agreed to what bankers describe as a fair and reasonable price range for the IPO of its Singapore Post operations. The high yield and modest price earning multiple are designed to attract buyers concerned about SingPost's moderate growth prospects and the continuing march of the Sars virus across the region.

Australia Despite treasurer Peter Costello's plans to shut down Australia's bond market, the Australian May budget is expected to incorporate plans for new government bond issues to replace maturing debt.

Japan UFJ is the latest of Japan's big four banks to announce a capital increase. Lehman Brothers will arrange the transaction, which should inject ¥150bn ($1.25bn) into the bank.