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Harris Investment Management recently reduced its holdings in 10- to 30-year U.S. Treasuries and has been using some of the proceeds to buy short-duration premium home equity loans (HELs) in the secondary market. Maureen Svagera, portfolio manager of the $400-450 million asset-backed and commercial mortgage-backed portfolio, says investing in HELs shortens duration in anticipation of a recovery and an increase in interest-rates after the anticipated war with Iraq shows signs of a resolution. Harris has also been putting assets in short-duration corporates and mortgage-backed securities.

Getting in touch with the Oreck Corporation about a buyout credit last week was no Big Easy task, as employees were let off work to celebrate the Mardi Gras holiday. The New Orleans-based office was closed for the Bourbon Street festivities last Tuesday and no one was answering calls on Wednesday or Thursday either.

Wayne Schmidt, portfolio manager at Advantus Capital Management, will rotate 5% of the firm's $1.5 billion portfolio, or $75 million, from Treasuries into a combination of corporates and mortgage-backed securities. Schmidt plans this move over the next month, when he predicts the Treasury market will rally to a point where profit taking will make sense. He says that a war with Iraq will produce a flight-to-quality but that the rally will be short lived, as uncertainty will be resolved. His trigger for the move is when the 10-year Treasury drops to 3.25-3.50%. Last Tuesday, the 10-year Treasury had a 3.64% yield.

This chart, provided by Citibank/Salomon Smith Barney Inc., tracks bid-ask prices for par credit facilities that trade in the secondary market. It also tracks facility amounts, ratings, pricing and maturities.

Deutsche Bank has hired Conor Davis from Bank of America as an addition to its London-based high-yield trading desk. Davis resigned from BofA last week, where he had been a high-yield bond trader. He could not be reached for comment.

GMAC-RFC is looking to hire securitization structurers for its U.K. operation, according to an industry official familiar with the plans. The company, which originates residential mortgages in the U.K. and Europe, would like to broaden its capital markets group, enabling it to structure its own securitizations. Ultimately, GMAC would like to distribute its own deals as well, says the official. Several calls to Stephen Hynes, head of securitization at GMAC in Bracknell, Berkshire, were not returned. It could not be learned how many people the company is seeking to add.

The Goodyear Tire & Rubber Co.'s new $1.3 billion credit will not carry the restrictive assignment language that has caused problems with the company's existing credit. Goodyear's ability to nix trades in the secondary loan market had lenders concerned about liquidity (LMW, 2/17). But lenders are applying some leverage with the company back in the market, hat in hand. One buysider noted that Goodyear changed its tune because "it needs us now." Keith Price, Goodyear's spokesman, declined to comment on the change in stance on trade approvals.

Graham Packaging has completed a $820 million line of credit, eight months after a planned bank deal was nixed. Deutsche Bank and Salomon Smith Barney lead the facility that reworks the company's existing senior bank debt at a higher rate of interest. The spread over LIBOR increased by 100 basis points on the term loan and by 225 basis points on the revolver. The upward price flex was market driven, said Mark Leiden, director of investor relations for Graham, explaining that while the bank market was still strong, spreads have gone up since the company's previous deal. "The original agreement started in February of '98, during a pretty attractive time," he said.

At least three high-yield portfolio managers say they are less than enthused about the forward calendar. They note that most deals are small and from off-the-run industries, which make them illiquid and more trouble than they are worth to analyze. As of March 7, the calendar included just two deals larger than $250 million, and no deal larger than $400 million, according to data gathered by Merrill Lynch.

Last week started strong in high yield, but was softer through Thursday. B/E Aerospace's 8.875% of '11 dropped three points to 62. WorldCom holding company paper was up by 0.75 to 23. The energy sector showed strength. Here is selected action.

The Royal Bank of Scotland has been mandated to lead a credit backing equity sponsor American Securities Capital Partners and company management in the buyout of Oreck Corporation. A banker familiar with the deal said the full details of the credit have not been determined. But he noted the deal is estimated to comprise approximately $140 million of funded financing with a revolver. RBS is out to possible co-leads on the deal, he added, noting that a retail launch will soon follow. The vacuum cleaner company deal is expected to be leveraged just over three times debt-to-EBITDA, all senior. New Orleans-based Oreck sells cleaning equipment and machines throughout North America, South America, Europe and Asia. A RBS official declined to comment. David Horring, managing director at American Securities, did not return calls. An Oreck official could not be reached by press time.