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Bridgewater Associates will launch a portfolio of Treasury Inflation-Protected Securities in the coming months for institutional investors, says Daniel Bernstein, director of research at $35 billion in assets Bridgewater. He says the time is right for TIPS because pension funds are focusing more on protecting assets as the equity markets continue to slide. "In the $150 billion TIPS market, treasuries are growing at about $20-25 billion a year, which means that there is a lot of growth in that asset class," said Bernstein.

At least one independent analyst and one sell-side analyst argue that the recent sell-off in the bonds of Citigroup is overdone. Though some spread widening is justified, given the substantial legal risks the firm is facing from issues such as predatory lending, IPO allocations and analyst independence, bondholders should continue to add to positions, says Kathy Shanley, analyst at Gimme Credit, an independent research firm. Shanley argues that "the risk of a large legal settlement should be viewed within the perspective of a very large and diversified earnings base--especially by bondholders, who are less worried about growth in earnings per share."

David Ford, a senior analyst and portfolio manager with a background in high-yield bonds, has left Och-Ziff Capital Management and will join another New York-based hedge fund, Satellite Asset Management. Ford will be a partner at the firm. Ford declined comment, and Mark Sonnino, who founded Satellite three years ago with two colleagues from Soros Fund Management, did not return a call. A senior executive at Och-Ziff says the parting was amicable and the firm wishes Ford well. Ford has at least 10 years of experience investing in distressed and high-yield debt, according to the sell-side executive.

VCA Antech has refinanced $143.1 million in term loans through Goldman Sachs and Wells Fargo in order to take advantage of reduced interest rates and lower its payments. According to Tomas Fuller, cfo, the Los Angeles veterinary health care network consolidated its term loans into a new "C" tranche priced at LIBOR plus 3%. This gave the company a 63 basis point reduction in its weighted average interest rate, he noted, predicting that the reduction would save VCA about $900,000 in interest expenses before taxes over the next year.

A $60 million piece of Warnaco Group's bank debt was auctioned off last week at 27-28, but the parties involved could not be determined. The paper had been moving in the low 30s, and the size of the piece was said to have pushed down the price.

With only $5 billion of new deals it was quiet in the primary market in what essentially amounted to a shortened week to observe the first anniversary of the September 11 terrorist attacks. The improving risk appetite was evidenced however, with over $1 billion in high-yield deals which were successfully placed and the pipeline for forthcoming issuance continues to look robust. Deals came from Jefferson-Smurfit (B3/B-) for $700 million, and from Gray Television (B3/B-), for $100 million. Next week's slate includes a $250 million scheduled sale from meat packer Swift and Co., and a benchmark $1 billion sale for directory provider QwestDex (Ba3/B-). This augurs well for September issuance, which we estimate will approach the $25 billion level, a substantial recovery from the drought of July.

Wells Capital is making wholesale changes to its corporate bond portfolio that will include nearly quadrupling the number of credits in which it invests and taking quicker steps to sell out-of-favor issues. The abrupt change is an effort to limit the potential damage from any future individual credit blowups. The new strategy is being installed by Wells Capital's recently hired portfolio management team, which wants to prevent a recurrence of the poor performance that hurt their predecessors. At the same time, Graham Allen has resigned from his position as director of global fixed-income at the firm. Allen acknowledges that his responsibilities shifted earlier this year due to poor performance in the firm's core fixed-income portfolio. He says that he had a place at the firm, but decided that after 27 years in the business, it was time for a break. Plans to start his own mutual fund firm, to be called Oracle Investments, are already underway.

Merrill Lynch managed to retain collateralized mortgage obligation trading and sales veteran Laura Zwak after she announced her intention to join Morgan Stanley's growing CMO effort last Tuesday, according to an individual close to the situation. This insider says that increased compensation was the basis for her decision to stay at Merrill. Zwak was unavailable to comment.

Moody's Investors Service lowered its ratings of Dynamic Details' combined $123 million senior secured credit facilities from B1 to B3. The downgrade reflects the company's continuing losses despite restructuring initiatives and concern over Dynamic Details' spending capacity for information technology and future research and development. Moody's does not expect the Anaheim, Calif.- based company to recover anytime soon, and warns of later downgrades pending further cash balance depreciation that could cause noncompliance of the company's recently amended bank agreement. The sixth amendment of Dynamic Details' credit agreement reset its financial covenants through Dec. 31, 2003, allowing a waiver of previous covenant violations. The credit comprises a revolver and "A" and "B" tranches. "The market visibility for an upturn remains as murky at this time as it has been for months, and we are concerned in regard to their [Dynamic Details'] lackluster performance," stated Moody's senior analyst Howard Sitzer.

Nomura Securities International has hired Jean-Claude Khoury to bulk up its London-based securitization team. He will work on asset finance transactions and securitizations, a Nomura official says. He moves over from Deutsche Bank, where he was a v.p. covering conduits, collateralized loan obligations and residential mortgage-backed deals. Khoury left Deutsche Bank earlier this summer amidst a departmental reshuffle (BW, 7/22). He will report to Tariq Rafique, head of securitization and asset finance. Rafique says he still has some hiring to do.

Qwest Communications International was rumored to have traded a couple of times in the high 80s context last week, flat compared to where it was moving two weeks ago. The company announced last Tuesday that its was withdrawing its application to the Federal Communications Commission (FCC) to provide long-distance service in nine states due to lingering questions regarding the company's plans to restate its financial statements.

TheBank of America, Salomon Smith Barney-led credit for Rayovac Corp. has received a solid response in Europe and the U.S. since its post-Labor Day launch, with about $125 million raised so far for the $375 million U.S. "B" piece. A few $25-30 million tickets came in from individual funds, said a banker familiar with the transaction. The "B" tranche is being offered at LIBOR plus 31/ 4% with a 10 basis points up-front fee. The European tranche has also sparked interest, with some investors looking for the piece to be expanded from the current E50 million size. One banker said a larger tranche would enhance liquidity and allow bigger pieces to be assigned. It has not yet been decided whether to adjust the tranches though, she noted.