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Merrill Lynch and Credit Suisse First Boston are planning to close out NDCHealth's $225 million senior secured credit facility today with a number of concessions to investors. The oversubscribed deal was pumped up in terms of capacity, pricing and fees, said a banker familiar with the situation. The final credit consists of a six-year, $125 million "B" term loan flexed upwards from LIBOR plus 31/ 2% to LIBOR plus 4%. A 2% LIBOR floor was also installed with call protection at 102, 101, the banker added. A five-year, $100 million revolver was upsized from $75 million, with pricing hiked from LIBOR plus 3% to LIBOR plus 31/ 2%. The commitment fee on the revolver stayed at 1/2%. An accompanying offering of 101/ 2% senior subordinated notes due 2012 was increased from $175 million to $200 million, the banker noted. A Merrill official declined to comment, while a CSFB banker did not return calls.

Metris Companies is evaluating alternatives that could include tapping the bank loan market to deal with the June 2003 maturity for its three-year, $100 million "B" term loan. "We are looking at a number of different strategies," commented Ralph Than, Metris treasurer, explaining that potentially renewing the line is one of many alternatives. But Than noted that the issues banks are currently facing in terms of their existing credit exposures make the bank market lower on the list of priorities for companies looking to deal with their financing needs. Metris has no lead idea emerging at this point, he added.

Bids for New World Pasta sunk into the 80s after the company announced that its financial statements, particularly its accounts receivable and inventory balances, were incorrect. "There's really just no market for it," said one trader. "No one is willing to bid for it because they don't know the size of the restatement." Prior to the news the market for the company's term loan "B" was in the 99s. Wayne Robison, New World Pasta cfo and treasurer, could not be reached by press time.

Fitch Ratings upped Nextel Communications' outlook from negative to stable on the company's BB rated senior secured credit facility after Nextel was able to significantly increase operational cash flow and reduce debt. "Over the last three quarters the company has met expectations and exceeded them," said Bill Densmore, Fitch analyst. Expected operational cash flow for 2002 now clocks in at $3.1 billion up from $1.2 billion in 2001.

Nextel Communications received positive attention from secondary market players last week ticking up to highs the paper has not seen for almost a year. Quarter after quarter Nextel has outperformed expectations, said one trader, adding that speculation of further consolidation in the wireless sector also has people paying more attention to the paper. Traders said the "B/C" tranche traded three times in the Street at 92 last Wednesday and then up to 93 1/2 on Thursday. Nextel's term loan "A" and "D" also were able to reap some of the attention with trades in the 90-91 context and 88 3/4-89 1/4 ranges, respectively. "People are shorting the bonds and buying the bank debt," noted one trader. Calls to a Nextel spokeswoman were not returned by press time.

Trimaran Advisors is awaiting a vote from senior creditors on whether to immediately liquidate Caravelle Investment Fund, a $625 million market value collateralized loan obligation. A significant decline in the value of the assets caused Caravelle to fail its Class D overcollateralization tests due to markdowns on loans and bonds. The failings could not be cured, leading to an event of default, explained Elizabeth Russotto, a Fitch Ratings director. "The event of default gives the senior creditors the right to vote the fund into immediate liquidation, which would cause the collateral manager to rapidly liquidate the portfolio," Russotto explained.

Charter Communications rallied a couple of points despite the announcement that an additional $1.4 billion of franchise costs and $1.2 billion in deferred income tax liability should have been recorded. Market players said the bank debt traded up to the 83-84 range from the 81-82 context because the news removed some of the uncertainty that has surrounded investigations into Charter's accounts. In addition, market players said the news had a net zero effect on the company's cash position. "It doesn't have any impact on cash flow," noted Eric Geil, Standard & Poor's analyst. David Andersen, Charter spokesman, explained that the franchise costs were actually on the asset side of the company's balance sheet versus the tax which counted as liabilities. "They cancel each other out," he said.

The spigot opened this week and the debt markets groaned under a wave ofissuance, the likes of which we have not seen for many months. By Friday morning supply totaled $22 billion for the week with the vast majority ($19.6 billion) in the investment grade arena. The resurgence in risk appetite is evident in the fact that nearly all the investment grade deals were in the single-A or triple-B rating category with recently out-of-favor names such as GMAC and Household able to tap sizeable demand. It was also interesting to note that several of the issuers that participated in last week's structured Core bond deal such as Kimco Realty and General Mills this week tapped the market under their own volition. Several of the deals were reportedly sparked by reverse enquiry from investors that did not favor the structuring constraints of the Core bonds but had appetite for some of the included names given their issuing levels.

Deutsche Bank has recently completed setting up a global credit arbitrage investment arm to invest in fixed-income securities and then either repackage or keep them on its balance sheet, according to BW sister publication Derivatives Week. The firm, dubbed Winchester Capital Principal Finance, could have a balance sheet topping hundreds of millions of dollars, according to market officials. Market officials said Deutsche Bank decided to set this up now because the CDO market has reached a size where it makes sense to have an independent entity investing in different CDOs. Another official speculated that Deutsche Bank had not turned its attention to this before because it had made enough money from its structuring desk, however now that CDOs are becoming harder to shift and margins are decreasing it is looking for new opportunities.

David L. Babson & Company, struggling with the high defaults in its 1999 high-yield collateralized debt obligation Perseus CDO, has taken another downgrade hit from Moody's Investors Service. The class B-1 and B-2 notes on the $565 million vehicle, have been downgraded from B1 to B3, with the ratings on watchlist for another possible downgrade. The vehicle is approximately 70% bonds and 30% loans, and though the defaults have been mostly bonds, both asset classes have been affected, said Rodanthy Tzani, an analyst in the structured finance group at Moody's. Managers at David L. Babson, a Massachusetts Mutual Life Insurance Company subsidiary, did not return calls.

Deutsche Bank last Tuesday launched syndication of a $240 million credit backing Grant Prideco's, $350 million acquisition of Reed-Hycalog from oil field service-company, Schlumberger. The line will consist of a four-year, $50 million "A" term loan priced at LIBOR plus 23/ 4% and a $190 million revolver with a LIBOR plus 21/ 2% spread, explained an official. There is a 1/2% fee for $25 million commitments and a 35 basis point fee for $15 million commitments. The company also intends to raise $175 million through a private placement of senior unsecured notes due 2009. If the bond offering does not pan out, there is a committed provision for a supplemental bridge loan, the banker said. The credit is fully underwritten and is an asset-based deal, he added. A Deutsche Bank spokesman declined to comment.

R.H. Donnelley's $850 million "B" piece has been oversubscribed and was set to close as Loan Market Week went to press, said a banker familiar with the credit. The remainder of the $1.55 billion loan package is expected to close early this week, with final terms scheduled to be completed after the holiday, he added. Lead banks Deutsche Bank, Bear Stearns and Salomon Smith Barney priced the "B" tranche at LIBOR plus 4%, while the spread on the $125 million revolver and $575 million "A" loan is LIBOR plus 31/ 2%. The deal also includes pre-payment penalties. Bankers on the deal either declined to comment or did not return calls.