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The Italian government's latest securitization of real estate assets, the E6.7 billion SCIP 2 deal, broke new ground last week as it was the first state-sponsored securitization to conform with the new Eurostat rules announced last July. The deal used tranching instead of over-collateralization to meet the Eurostat definition of a true asset sale.

Lehman Brothers has priced the notes for Stanfield Capital Partners' $300 million collateralized loan obligation, Carrera CLO. The notes had been in the market for four to six weeks. A banker familiar with the deal said there was solid demand for the paper, explaining the timing for the decision to sell the debt. A portfolio manager added that it's a favorable time to price as the spreads on the pool of underlying collateral are relatively wide. The deal still needs to buy approximately 40% of the collateral, according to the banker. The cash-flow arbitrage vehicle, which comprises 95% leveraged loans and 5% high-yield debt, is the second CLO Stanfield has raised debt for this year (LMW 11/3). Officials at Lehman and Stanfield declined comment.

Level 3 Communications' bank debt climbed about five points last week on news that the company has signed a definitive agreement to acquire all the assets of Genuity. Traders said that the bank debt rose to the 72 range, up from the mid-to-high 60s. This summer, Level 3 received a $500 million injection of new capital from Longleaf Partners Funds, Berkshire Hathaway and Legg Mason. At the time, market players speculated that the company would be in a position to begin consolidation in the telecom sector. Questions for Sureel Choksi, Level 3's cfo, were referred to a spokesperson, who did not return calls by press time.

Allegiance Telecom has to reduce its $1.275 billion in debt to $660 million by April 30, 2003 in conjunction with a recent amendment to its credit agreement. While some type of debt to equity swap could be on the agenda, Thomas Lord, Allegiance Telecom cfo, declined to reveal his cards at this time. There are no structural limitations for how the company can reduce its debt, explained Lord. Meanwhile, Edward Rose, president of Cardinal Investment Co., has reportedly bought 20% of Allegiance's bank debt and has been buying up some of the company's $623 million in bonds as well.

As Citigroup appears close to settling its investigation with New York State Attorney General Eliot Spitzer, at least one independent analyst is questioning the strength of its core businesses. However, a sell-sider says the financial services giant's bonds will continue to benefit from spread tightening in the corporate market.

David Maura was recently dismissed from Merrill Lynch, where he was a high-yield consumer products analyst, because of similarities between a recent research report he published and reports written by his predecessor, George Chalhoub. He has hired counsel and is attempting to resolve the situation with Merrill. Maura, hired in July, was under contract to receive nearly seven figures this January, according to one person with knowledge of the situation. Maura declined to comment on the amount he was to receive. Allan Dinkoff, Merrill's general counsel, referred calls to Mark Herr, a spokesman. "We're going to decline to comment on the substance of this matter, but we're taking a hard look at the situation and will take the appropriate course based on the hard look we're taking," Herr said.

David Whitehouse, a senior collateralized debt obligation salesman at Morgan Stanley, recently left the firm, according to one of his colleagues. The circumstances of his departure could not be determined. Whitehouse, an executive director, structured funds and structured credit products sales, reported to Len Brous, principal who heads the CDO sales effort at the firm. Whitehouse did not return a call to his residence. Brous did not return calls seeking comments.

Royal Bank of Scotland has made a new hire to its London-based securitization team. Malcolm Jackson, formerly a member of Mizuho Corporate Bank's London securitization team, has joined RBS to work on commercial mortgage-backed securitizations and whole business deals, says an official familiar with the move.

J.P. Morgan is the only bank of five U.S. commercial banks reviewed that earned its cost of capital in the large corporate lending business over a five-year credit cycle, according to a report from Salomon Smith Barney. AnalystRuchi Madan, author of the report, said the ability to cross-sell nonlending products is the key to profitability. Even as the "tying" debate heats up in Washington, the point is pushed that banks have to be able to leverage lending relationships into investment banking and other services. "Talk of separating banking from investment banking doesn't make sense," Madan contends. "Banks can't be expected to destroy shareholder capital to provide bank credit to corporations." She declined to comment beyond her report.

Solutia will evaluate its lead banks when the company closes the sale of its resins, additives and adhesives businesses for $500 million to UCB. The proceeds will pay down $127 million of a $300 million revolver and a $300 million term loan, said Liesl Livingston, director of investor relations for Solutia. "The revolver will still be in place, but we will evaluate whether we need the capacity and whether to stick with the lead banks," she added. "We are not looking to change banks, but every option is open to us," she said. Bank of America and Citibank lead the senior secured credit facilities for Solutia. Officials at the banks could not be reached by press time.

Hispamer, Spain's largest consumer lender, is preparing Santander Consumer Finance--a special purpose vehicle through which it plans to securitize at least E3 billion per year in loans originated in Spain, Italy and Germany, says Eduardo San Martin, managing director of treasury and finance in Madrid. The program will start next year. Investment banks have not been mandated for any deals and San Martin says deals will be put out for bid on an issue-by-issue basis.

A report recently published by Standard & Poor's that contains wildly diverging actual recovery rate data for defaults in collateralized debt obligations has left many credit derivatives professionals scratching their heads over the huge variations. The data shows the U.S. dollar amount CDO investors were able to recover on corporate credits after the names had defaulted and therefore how much money they lost.