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A $4.7 billion refinancing for CenterPoint Energy, previously Reliant Energy, was pulled from the fire in the wee hours of Friday morning after tough terms were demanded by the banks. As first reported on LMW's Web site, the company secured the crucial refinancing after blowing its original deadline of Thursday at 5 p.m. West LB was the sole holdout as the deadline passed, but the bank ended up coming in on the deal, quashing the threat of a potential Chapter 11 filing. A spokesman for CenterPoint said WestLB and 29 other banks agreed to the new financing. The company is required to raise $400 million of third-party capital to replace maturing debt and, if the capital is not raised, the credit facilities will mature on Nov. 15 this year.

Citigroup/Schroder Salomon Smith Barney is seeking to rebuild and expand its European securitization research team. Richard Pagan, co-head of European credit research in London, says the firm is still discussing the size of the team, which had consisted of one analyst until Shaker Sundaram, then its only European securitization analyst, left to become a salesman at UBS Warburg (BW, 8/25). Since Sundaram's departure, Pagan says the firm has determined "a team of one is too small." Now, Citi/SSSB is looking for a securitization research head to replace Sundaram as well as a few other analysts.

The proposed $525 million senior secured credit facility for coal producer Massey Energy is secured by high-quality accounts receivables and inventories, which should realize substantial recovery under a liquidation scenario. However, in the event of a default or bankruptcy, the secured debt holders are unlikely to receive full compensation. As a result, Standard & Poor's has assigned the credit a rating of BBB-.

The notes for Hewett's Island CDO, CypressTree Innvestment Management's innovative collateralized debt obligation, were priced late last month. The $257.5 million vehicle, which consists of 80-85% senior secured loans and 15-20% high-yield bonds, is distinct due to structural features designed to reduce negative arbitrage, market officials explained. The excess spread will be used to pay down the most expensive debt first, improving cash flow and boosting the return on equity over the life of the vehicle (LMW, 9/30). Links Securities underwrote the notes for the Boston-based asset manager.

Last week, Financial Research Associatesheld the Distressed Debt Summit 2002 at the Princeton Club in New York City. Highlights included trends in defaults and recoveries, advanced workout strategies and opportunities for distressed investors. Reporter Molly Jackson Sellwas on hand and filed the following stories.

Last week saw weakness throughout the high-yield market, except for a slight rally on the back of equities Thursday afternoon. Media and energy were among the stronger performers, though prices were still lower in these sectors. The primary market remains closed to most issuers, but FMC Corp., a chemical manufacturer, sold $355 million of senior secured notes. Here is other action.

David Weigert is joining Hartford Investment Management's asset-backed securities group as an ABS analyst with a special focus on home equity bonds, says Allan Berliant, ABS group chief at HIMCO, who hired him from Aeltus Investment Management. Weigert was an ABS trader at Aeltus, also located in Hartford. He could not be reached for comment. Weigert will report to Berliant and will start next Monday.

Aryeh Bourkoff, high-yield cable and satellite analyst at UBS Warburg in Stamford, Conn., will add equity coverage to his research duties. It could not be determined who, if anyone, handled equity coverage previously. Bourkoff referred questions on the subject to Kris Kagel, a UBSW spokesman, who declined comment.

Recent weakness in the bonds of United Rentals, a roughly $1.4 billion junk issuer with the largest market share among North American equipment rental companies, has created an attractive buying opportunity, according to at least one portfolio manager and one sell-side analyst. Fort Washington Investment Advisors in Cincinnati added $1 million of the company's 10.75% notes of '08 (B1/BB) to its portfolio because the bonds are quite senior in the company's capital structure, says Brendan White, manager of $1.1 billion in junk bonds at the firm. White says Fort Washington will add more bonds if the company hits its fourth quarter numbers and business and economic trends show signs of improvement.

Marc Lasry, managing partner of Avenue Capital Group, is in the process of raising capital for a new distressed debt fund Avenue Special Situations Fund III. The firm has raised approximately $600 million in commitments and is looking to raise an additional $150-200 million in the next three months, Lasry said. Avenue Capital also will be hiring additional analysts to support the new fund.

Expected returns in this latest go-around through the corporate credit cycle are not likely to be as high as when defaults peaked in the early 90s, according to conference participants. Historically, the greatest returns for investments in distressed debt have come at the times of greatest supply, said Marc Lasry, managing partner of Avenue Capital. But while the supply of distressed debt may be at an all-time high, return rates have yet to reach the levels experienced in the early 90s. According to data from Credit Suisse First Boston, overall default recovery rates in the early 90s were roughly 37%, compared to recovery rates of only 27.6% for the 2000-2001 period.

Lehman Brothers' London-based head of European equity derivatives sales Francois Pham-Quang has left the firm to open a fund specializing in the securitization of music industry assets, according to BW sister publication Derivatives Week. The fund, called The Music Fund, will securitize the future earnings of several types of music assets, such as catalogues of published songs. The concept is similar to The Pullman Group's securitization of royalty streams, colloquially know as Bowie bonds. However, the financial technology used will look more like mortgage-backed securities, according to Pham-Quang. He predicted the fund would start trading when it has raised $150 million. It has seed capital of some $30 million.