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Levels for Venture Holdings' bank debt have been dropping since the company announced that the German courts had commenced insolvency proceedings against its German subsidiary Peguform. But the paper slipped further--into the low-60s--this week after Moody's Investors Service downgraded the company's credit facility to Caa1 from B2. According to the Moody's report, the company is now in default under its U.S. credit facility and acceleration of its debt maturities is possible.

Levels for Buhrmann's bank debt have been put under pressure since the company announced that it is withdrawing its prior earnings forecast due to the uncertain economic climate. The market for the company's term loan "B" has slumped about one point to the 97-98 range, although traders said no paper had changed hands. The company's U.S. revolver was quoted in the 90-92 range.

Salomon Smith Barney has combined its U.S. high-yield and high-grade credit trading businesses in an attempt to better allocate its resources to "crossover" credits--a booming area of the market consisting of bonds that are bought and sold by both high-grade and high-yield accounts. "We don't worry about where the bond trades, just that we have the best traders trading it," says Jim Zelter, head of the firm's global high-yield business, explaining the rationale for the new structure. Though other large dealers, including Morgan Stanley (BW, 8/19/01) and Merrill Lynch (BW, 1/13/01) have united high-yield and high-grade research, and Goldman Sachs has united its capital markets units, Salomon is believed to be the first large dealer firm to fully combine high-yield and high-grade credit trading.

A combination of lender fatigue and regulatory pressures has increased the supply of distressed bank debt available to hungry investors in the secondary loan market. "What we're seeing is a real opportunity for a distressed investor that will take the time to affect the turnaround and reap the rewards [because] the bank group is not necessarily ready to do so," said Lance Miller, director at Glass & Associates.

* If conference attendance is any way to measure the growth of a market, then the distressed debt market is on fire. This latest conference brought in so many attendees that delegates had to sit on the couches and chairs that lined the walls of the designated conference space.

Caja de Ahorros de Valencia, Castellón y Alicante (Bancaja) will come to market with a E1 billion residential mortgage-backed securitization, set to launch later this month. The bank has mandated Dresdner Kleinwort Wasserstein as sole lead manager, according to London-based bankers. The deal will be Bancaja's second RMBS transaction this year (BW, 8/4). In an interesting twist, market players say the last deal was sold to a single investor and as such, the upcoming deal is going to be the first time investors have access to Bancaja RMBS paper. Bancaja is Spain's seventh largest bank.

Standard & Poor's is looking for two senior collateralized debt analysts for its recently created CDO manager focus group, according to group head, Mark Gaw, associate director in New York. Both positions are newly created. The positions are for the associate director level--a senior title at S&P--and both analysts would report directly to Gaw. Created earlier this year, the manager focus group is part of S&P's structured finance division, although it closely works with the investment services group of the rating agency, headed by Joel Friedman. The group provides more visibility in the CDO market by releasing reports on CDO collateral managers' performance relative to their peers, at least for those willing to get the exposure. Gaw says he routinely talks to managers who refuse to be profiled. The group, he adds, has already evaluated 16 collateral managers, including firms such as BlackRock Financial Management, Deerfield Capital Management, PIMCO and American Express Asset Management. He plans to profile 10 more asset managers within the next few months.

A $200 million add-on credit for Genesis Health Ventures has been re-priced after Standard & Poor's weighed in with a B+ rating, one notch lower than the Ba3 opinion offered byMoody's Investors Service. "S&P is a little misinformed and took a different view to the collateral package than Moody's," one banker said. The $200 million add-on to the existing "B" piece was priced at LIBOR plus 31/ 2%, but it has been flexed upward to LIBOR plus 33/ 4% to reflect the rating, he noted, adding that the loan also is being offered with a 50 basis point discount. Bankers at First Union and Goldman Sachs, which are leading the credit, either declined to comment or did not return calls. A spokeswoman for Genesis Health also did not return calls.

The bank debt of AES Corporation was active last week with the revolver changing hands in the 84-87 range, up from the low 80s. The recent activity in the name comes after the company announced that it would complete a new $1.6 billion credit facility. The new credit is earmarked to refinance the company's existing $850 million revolver maturing in 2003, the $425 million term loan due in August 2003 and the $263 million term loan for subsidiary AES EDC Funding II. The new credit, however, still needs 100% lender approval.

Amkor Technology extended an amendment to its bank covenants through December 2003 in order to maintain more flexibility during a severe industry downturn, according to Kenneth Joyce, cfo. When the company's credit facility was originated, the covenants were based on liquidity and cash flow, Joyce noted. But as the West Chester, Pa., company was hit by the technology slump, it could no longer uphold the same terms. The current covenants were implemented for the year ending this December but, because the company had not violated the covenants this year, the lenders felt comfortable extending the amendment through December 2003, he said.

Moody's Investors Service has placed all of Broadwing's ratings on review for a possible downgrade, reflecting concerns that the company's funding needs and covenant compliance demands will continue to fall under pressure in the near term. Ratings under review include the Cincinnati-based communications service provider's senior secured debt--comprising three term loans and a revolver totaling $2.3 billion--rated Ba3, as well as $46 million in senior subordinated debt rated B3.

Calpine's bank debt traded in the high 70s last week, with market players attributing the paper's dip to sector problems and bank holder disappointment concerning the use of proceeds from a recent asset sale. The bank debt dipped down from the high 80s, where it was said to have traded a couple of weeks ago. "We can't find a bottom on this," one dealer said, noting that bids keep sinking and offers slide right after.