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WEEKLY UPDATE

DDJ Capital, a Wellesley, Mass.-based distressed debt investor, is believed to have bought up the majority of SLI's bank debt in the 15 context. The trades, estimated to be for about $200 million worth of paper, are rumored to have been brokered by FleetBoston Financial, which led the credit. Judy Mencher, co-founder and principal of DDJ, referred calls to a spokeswoman, who cited the firm's policy of not commenting on its investments or strategies. Calls to Fleet officials and Robert Mancini, SLI cfo, were not returned by press time.

KBC Financial Products has hired two senior analysts and a senior salesman as it continues its effort to grow its high-yield business, says Joe Garofoli, managing director at the New York-based unit of Belgium's KBC Bank.

Mike Weston, Morgan Stanley's London-based head of global head of debt syndicate, has resigned from the firm to take a break from the industry, according to a firm insider. The insider says Weston maybe interested in returning to his native New Zealand. His duties will be assumed by Raj Dhanda and Michael Heaney, who will serve as co-heads of global debt origination. They report to Walid Chammah, co-head of global capital markets. Previously, Dhanda had been head of U.S. head of debt syndication and Heaney was head of European debt syndication. A Morgan Stanley spokesman declined to comment.

National Bedding Company increased the "B" tranche of its new $235 million credit after the Bank of America-led credit met with strong institutional demand. The "B" tranche was increased by $100 million and is now set at $132 million. The credit's five-year "A" piece was decreased from $75 million to $43 million, said Jim Polark, v.p. and cfo. A five-year revolver remained at $60 million. The credit backs National Bedding's recent acquisition of the bankrupt Serta brand mattress manufacturer Sleepmaster. Polark explained that $117 million went toward the payment of Sleepmaster's debt, while $35 million went to Sleepmaster's creditors committee. The facility also refinanced the company's debt, including about $55 million on an existing $85 million term loan and revolver facility, Polark stated. Revolver usage on the new line will include $31.9 million of standby letters of credit issued to support industrial revenue bonds (LMW, 2/10).

Nextel Communications' "B" loan climbed up to heights unseen for the paper in more than a year, as it traded in the 97 1/8 range last week. "The trends for the business are good," noted one investor, explaining that the paper had been so depressed partly because of its association with the telecom sector. "We're glad that the market is recognizing our progress," said a company spokeswoman, in regards to the uptick.

Oaktree Capital Management is planning a new distressed debt fund, OCM Opportunities Fund V, and will likely start marketing the fund within the next two months. Howard Marks, chairman of Oaktree, said the size of the fund will range from $750 million to $1 billion and will be offered to existing clients. Oaktree has a $50 million commitment from the Illinois State Teachers Retirement System waiting for when the fund launches.

Orius Corp. secured a new $145 million credit to facilitate its exit from bankruptcy, a process that allowed the provider of telecom infrastructure services to reduce its debt load by about 80%. The company had $350 million in principal value in term loans and $150 million of subordinated notes. It now has $100 million in term loans, said Robert Agres, senior v.p. and cfo of Orius. As Orius' pre-petition lender, Deutsche Bank led the exit facility.

Allegiance Telecom softened last week from the 62-64 context to the 58-60 range after the company reported a consolidated EBITDA loss of more than $15 million for the fourth quarter of 2002. No trades could be confirmed. Levels for the company's bank debt have been climbing out of the 30s since December. But for bank debt to support the levels in the high 50s and low 60s, there has to be some kind of restructuring plan in the works, noted one dealer.

Morgan Stanley's corporate bond sales group has seen a number of recent changes, according to firm officials. Steve Penwell, a managing director who became the firm's North American head of credit sales last year (BW, 1/27), has moved to a client marketing role at the firm. He did not return a call, and his exact duties could not be determined. Mike Donoghue, the head of cash sales, and Suzanne Cain, the head of derivatives sales, both of whom had reported to Penwell, are now reportedly New York co-heads of credit sales, effectively eliminating a layer of management, according to one of the firm officials. Calls to Penwell, Donoghue, Cain and Stefano Corsi, global head of fixed-income sales, were not returned.

Shinsei Securities priced an innovative securitisation for four Japanese originators on Monday. Hydra Funding Corp is thought to be the first mortgage securitisation in Japan pooling non-performing and sub-performing collateral.

ING and Morgan Stanley brought two equity-linked issues to the market from Taiwanese names this week, with contrasting results. ING's deal for TFT-LCD maker Chunghwa Picture Tubes (CPT) was heavily oversubscribed, but Morgan Stanley's deal was only sold at a low premium. On Monday, Taiwanese computer and home appliances manufacturer Tatung Corp monetised 3% of its holding in CPT.