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While high-yield was flat overall through last Wednesday, it showed surprising resilience given the geopolitical uncertainty and healthy supply of new issues, says Jon Budish, senior trader at Jefferies & Co.New issue activity slowed, which many buy-siders attributed to a J. P. Morgan Securities high-yield conference in New Orleans. Pegasus Communicationswas downgraded two notches by Standard & Poor's. Here is selected action.

Many investors are opting for a layover on the UAL Corp. $1.2 billion debtor-in-possession deal led by J.P. Morgan, Citibank, Bank One and CIT Group. Despite eye catching pricing, some market players are still avoiding the long-time negative cash flow airline. An investor who opted not to participate in the deal quoted pricing levels climbing and possibly surpassing the LIBOR plus 6% range with a 3% LIBOR floor, as well as an original issue discount up to 5%. The deal launched last December with a LIBOR plus 41/ 2% coupon and a 2% LIBOR floor. Commitment levels could not be confirmed by press time, but one investor said credit issues were the main things keeping investors away. Without the DIP, the company will not survive, according to a company report.

Banca Popolare di Vicenza is expected to price its first, and what will be its only, mortgage-backed deal of the year this week. The E409.65 million deal will be backed by residential and commercial mortgages. Pietro Cirenei, Banca Popolare di Vicenza's cfo, says, "We are a retail bank with a very consolidated market share in Northern Italy. We originate about E500 million in mortgages per year and fund that business through securitization, which gives us pricing advantages." Cirenei says the firm has no plans to securitize other assets. Schroder Salomon Smith Barney is arranging the deal.

Kmart's bank debt climbed up after the company released its plan of reorganization providing pre-petition lenders holding $1.08 billion in claims with roughly 40 cents on the dollar for their commitments. The bank debt was said to have traded in the 36 context, before ticking up to the 37-39 range, with a few pieces changing hands.

MBNA Bank Europe is said to be planning its first European deal of the year, and it may come as soon as this month, according to London-based bankers. Vernon Wright, executive vice-chairman and chief corporate finance chief at MBNA's world headquarters in Wilmington, Del., declined to say what the timing of any European deals would be. He did say, however, to expect to see euro- and sterling-denominated deals from the credit card giant this year.

A group of Hayes Lemmerz International bank debt holders are seeking a reorganization plan separate from the one pursued by CIBC World Markets, which is agent to the pre-petition lenders who hold about $750 million in claims. The exact details of the plans could not be determined, but investors said the plan pursued by the dissident lenders would likely offer lenders more juice. Officials from CIBC and its counsel did not return calls by press time.

Trainer Wortham is wrapping up a $300 million multi-sector collateralized debt obligation, according to a CDO market participant. It is the third CDO for this New York-based collateral manager and its first this year. Pricing is slot for the early part of this month. Credit Suisse First Boston is the underwriter. Calls to Chris Ricciardi, head of CSFB's structured credit product group, and to John Knox, head of fixed-income at Trainer Wortham, were not returned by press time.

Public Service Enterprise Group (PSEG) has secured an upsized, $350 million multi-year credit facility in anticipation of reducing its shorter-term borrowings, said Morton Plawner, treasurer of PSEG. The shorter-term borrowings include $695 million of commercial paper backstop facilities coming due in March. "We don't want all of our facilities to be 364-days," noted Plawner. He explained the company wants to relieve the pressure of refinancing each year and the new credit comes with the support of the rating agencies.

Greg Coules has joined J. P. Morgan Securities in a newly created position as a v.p. and distressed loan analyst, according to sell-side officials with knowledge of the hire. Coules was one of a number of high-yield professionals released from Morgan Stanley in November (BW, 11/19). He had spent three years at Morgan Stanley covering the broadcasting sector. Coules declined comment when reached at J. P. Morgan. He will report to Eric Rosen, managing director and head of the loan trading group. Rosen declined comment.

Art Penn, the ex-global co-head of leveraged finance at UBS Warburg, has resurfaced at French bank CDC IXIS North America and is said to be looking to set up a middle-market leveraged finance shop. Penn did not return repeated calls regarding his plans, but several market players said a leveraged finance outfit is in the works. A spokesman for CDC said Penn is working within the ABS group alongside Joe Piscina, former head of asset-backed finance at PaineWebber. He noted that nothing has been approved and as a state-controlled entity, CDC is very risk averse. "CDC is taking its time to expand its ABS business," he said.

Ex-UBSW Honcho Making Plans

Morgan Stanley and Bank of America have five tickets in hand and are closing in on another in their retail effort for Tyco International's $1.5 billion credit. ABN AMRO, Credit Lyonnais, Société Générale, UBS Warburg and CIBC World Markets signed onto the fully underwritten deal with $100 million bids from each, according to bankers familiar with the facility. All of those commitments came in ahead of the launch meeting last Monday. A banker added that Scotia Capital was reportedly close to joining as LMW went to press last Thursday.