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Global eXchange Services (GXS), a business-to-business e-commerce company being purchased by Francisco Partners from General Electric, has a limited track record both operating as an independent company and sustaining profitability improvement following its recent cost restructuring actions, according to Standard & Poor's analyst Emile Courtney. As a result, the agency has rated its proposed $210 million credit facility and $235 million of senior subordinated notes BB- and B, respectively. Moody's Investors Service, meanwhile, points out that GXS will have to exist without the benefits of GE's brand identity and advertising. Moody's therefore has assigned a Ba3 rating to the bank debt and a B2 rating to the notes.

Despite benchmark indices showing spreads are approaching historic wides, traders report that the market remains extremely bifurcated, with better credits steadily improving and troubled credits simply unchanged.

J.P. Morgan approached Alliant Techsystems and suggested that the company refinance its $472 million "B" term loan in order to achieve lower pricing. "Our advisor suggested that the timing was right," said Eric Rangen, cfo, explaining that Alliant had been performing well and there was strong demand in the market for quality paper. As a result, the Edina, Minn., company was able to lower its interest rate spread by 75 basis points to LIBOR plus 21/ 4%, he noted.

Orest Stelmach, high-yield portfolio manager at Steinberg Priest & Sloane Capital Management in New York, says chemical producers MacDermid, Noveon, Hercules and Methanex are ones that produce significant free cash flow even in a down cycle, and stand to do significantly better once the economy turns. He has recently purchased these bonds, using a mandate the firm won from CALPERs.

Levels for Kmart's bank debt continued to plummet after the company released second quarter financial results on Sept. 16. Traders quoted the paper in the 27-31 range last week, down from a wide bid-ask spread of 30-40 two weeks ago, and one dealer noted that a small piece of the company's bank debt had traded around the 28 level.

Lehman Brothers has promoted two of its high-yield analysts to managerial positions. Susan Jansen, retail and lodging analyst, and Christine Daley, who follows distressed credits, have become deputy heads of high-yield research reporting to Mike Guarnieri, the group head. Guarnieri says the promotions were made to reward the two analysts for their excellent work. Daley has been the top distressed analyst four times on the annual Institutional Investor All-America Fixed-Income Research Team. Jansen has placed third in the II poll for two straight years. They will retain responsibility for their sector coverage.

UBS Warburg has set pricing on the $635 million bank deal for Zurich-based Centerpulse, formerly Sulzer Medica. The $335 million "B" piece is priced at LIBOR plus 31/2 % with a commitment fee of 25 basis points, while the $300 million "A" term loan holds a spread of 23/4 % over LIBOR, one banker said, noting that both tranches are split equally between U.S. dollar and Euro-denominated portions. The meetings in New York and Zurich were well attended, the banker noted, although commitment levels so far could not be ascertained.

The debtor-in-possession financing for U.S. Airways, which is led by Bank of America and Credit Suisse First Boston, has been shelved after the Retirement Systems of Alabama trumped the Texas Pacific Group's bid for the airline. Instead of the banks providing a $500 million DIP facility, the retirement fund has stepped up with its own underwriting commitment. One investor looking at the proposed bank loan said, "Once Alabama announced their intentions, we knew the loan was dead." Calls to U.S. Airways regarding the financing were referred to a spokesman for the Alabama pension fund, who did not return calls.

Bonds of many retailers are likely to underperform the market ahead of an expected weak Christmas shopping season, according to buy- and sell-side analysts. Retail is one of the few sectors that has held up this year, and the market is looking for the first excuse to dump bonds of companies such as Kohl's (A3/A-), SuperValu (Baa3/BBB), Safeway (Baa2/BBB) and Federated (Baa1/BBB+), says Jim Claire, head of fixed-income trading at Evergreen Investment Management. Highly-rated Target (A2/A+) and Wal-Mart (Aa2/AA) are the only ones expected to weather the storm. "First it's that back to school sales sucked, then it will be that Christmas sales suck--meanwhile, Target and Wal-Mart trade tighter than the skin on a conga drum." Evergreen owns Target and Wal-Mart's bonds, but has minimized its exposure to other retailers for some time, Claire says.

Wyndham International's increasing-rate loan firmed up to the 83-86 range from the 81-83 context after the company announced that it would sell 13 of its properties toWestbrook Hotel Partners IV for $447 million. A company spokesman said $240 million of the proceeds from the sale would be used to pay down the company's increasing-rate loan, its term loans and its revolver on a pro-rata basis. The remaining $189 million would go towards mortgage debt. Overall, this is a positive development, one trader noted, adding that the move reduces leverage and improves liquidity.

Station Casinos did not want to worry about market pricing when its bank facility matures in September 2003, so it decided to refinance early, according to Glenn Christenson, executive v.p. and director. The Las Vegas gaming company was able to secure a new five-year, $365 million revolver with tiered pricing ranging from LIBOR plus 13Ž 4% to LIBOR plus 21Ž 2%, based on debt-to-EBITDA multiples, Christenson noted. The line also has a commitment fee of 75 basis points.

Swiss Re will add $1.5-2 billion in corporates--up to 10% of its $20 billion life insurance portfolio--once the U.S. stock market and corporate earnings show signs of stabilizing. The move would not be based on the expected war because the outcome is too uncertain, says Andre Moutenot, portfolio manager of $35 billion in taxable fixed-income. He believes 10-year Treasury rates are certain to back up from 3.76%. Similarly, he says benchmark corporate bonds such as the Ford Motor Company 7% notes of '12 are sure to trade tighter than their levels last Wednesday of 336 basis points over Treasuries. However, Moutenot says he does not know when the market will stabilize and declines to give specifics about what triggers Swiss Re will look for before taking the plunge.