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The oil workers' strike in Venezuela has caused Fitch Ratings to lower CITGO Petroleum's senior unsecured debt rating from BBB- to BB- due to severe disruption of the country's oil exports. CITGO has been forced to find alternate sources for much of the crude oil usually supplied by Petroleos de Venezuela S.A. (PDVSA), the state-owned oil company of Venezuela and an indirect parent of CITGO. CITGO usually purchases 50% of its crude from PDVSA and has successfully acquired other crude sources throughout the strike.

WEEKLY UPDATE

Credit Suisse First Boston has hired Jerry Wood, managing director in fixed income and 20-year veteran of Morgan Stanley in New York, to work in a senior position in the firm's bond division, according to BW sister publication Derivatives Week. Officials familiar with the situation noted that Wood is close to CSFB's CEO, John Mack, having worked with him at Morgan Stanley, arguing that the hire reflects Mack's continuing effort to fill senior positions with loyal lieutenants. Wood didn't return calls. Mack's secretary referred calls to Cristina von Bargen, spokeswoman, who declined comment.

CSX Lines' control over a large portion of the U.S. flag vessel market gives strength to the company's $200 million credit facility, which backs The Carlyle Group's acquisition of the ocean-liner operator from parent company CSX Corp. U.S. Flag vessels are ships owned, manned and built by the U.S. Under the Jones Act, only these vessels can transport cargo between U.S. ports. The limited competition allows CSX Lines to hold a 37% market share in its major trade routes from the mainland U.S. to Puerto Rico, Hawaii, Guam and Alaska, explained David Berge, a Moody's Investors Service analyst. The rating agency has assigned a Ba3 rating to the credit.

London-based securitization syndicate bankers say timing deals is key this year if the market is to avoid the bottleneck of issuance seen in the fourth quarter, which significantly softened spreads. "In general, we're going to have to be more clever about timing. The fourth quarter saw spreads becoming soft under the weight of new issuance," says Nick Morgan, head of ABS and CDO syndicate at Dresdner Kleinwort Wasserstein in London. "There were too many deals and too many balance sheet deals. Pricing got soft, more so than in previous years," he adds.

The Altman NYU-Salomon Center defaulted bank and bond indexes continued to diverge last month with the bank loan index rising by 2.51% and the defaulted bond index declining by 2.28%. This follows the pattern of the total returns for last year, according to research by Edward Altman, Max L. Heine Professor of Finance at New York University. The bank loan index in 2002 showed gains of just over 3%, while the bond index declined by almost 6%, Altman indicates.

Credit Suisse First Boston, Bank of America and Dresdner Bank were set for a bank meeting in Europe last Friday for dialysis provider Fresenius Medical Care's $1.5 billion refinancing credit. The U.S. launch is set for tomorrow. One investor pointed to the success of DaVita's $800 million "B" piece in March 2002 and suggested that Fresenius would likely do the same or better. The DaVita deal blew out with more than $1 billion in commitments (LMW, 4/1). DaVita is also a dialysis provider and its debt is quoted at the 100 to 100 1/2 context, according to LoanX.

Barclays Capital wants to beef up its U.S.-based securitization research effort by adding a home equity analyst by the end of the first quarter, according to a firm insider. The analyst would report to London-based William Lloyd, head of securitization research. Lloyd declined to comment.

Keefe, Bruyette & Woods has added Steve DiTursi to its corporate bond trading desk as it looks to grow its fixed-income business, according to Craig Coats, co-head of fixed-income. DiTursi will trade utilities and industrials. He joins from RW Pressprich & Co., where he was the head of corporate bond trading. He declined comment. RW Pressprich's plans to replace DiTursi could not be determined. A call to Ed Rappa, the firm's chairman, was not returned.

Kevin Wilson is v.p. and treasurer of Solutia Inc., an applied chemistry company and high-yield issuer based in St. Louis.

Kmart's bank debt shot up after the company announced that it was close to filing a reorganization plan. The company's three-year credit facility was said to have traded into the 32-33 range, up from the mid-20s, where it has been languishing since before the holiday season. Although net sales for the holiday season decreased 5.7% this year, the bank debt climbed as creditors began to see an end in sight for the bankruptcy process.

Scotia Capital, Salomon Smith Barney and Bank of America have closed the book on Levi Strauss & Co.'s $400 million "B" piece which was oversubscribed by a significant amount, said a banker familiar with the deal. The institutional piece was sold at 991/ 2. He was unable to say by how much the deal was oversubscribed. Pricing did not change on the $800 million debt package. The pricing is still set at LIBOR plus 4% for the term loan and LIBOR plus 31/ 2% on the $400 million revolver. The deal refinances Levi Strauss' B1-rated, $1.05 billion facility with the three banks that was to mature in August of this year. Credit Suisse First Boston, FleetBoston Financial and J.P. Morgan have committed to the revolver. Scotia and B of A officials declined to comment, while a Salomon official could not be reached by press time.