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Despite the continued layoffs afflicting Wall Street and concerns over reduced compensation, the record levels of distressed debt activity are putting at least one group of portfolio managers in the money. According to a Greenwich Associates survey, U.S. distressed debt managers earned on average $732,000 in 2001, compared to $570,00 for high-yield bond managers. Credit derivative portfolio managers, meanwhile, on average earned $543,000. "The risk posture, or risk-reward, of the investments is the key driver in the higher compensation afforded to these individuals," said Greenwich marketing analyst Bill Staikos. The remuneration compares to an average compensation of $321,000 for U.S. fixed-income managers, the survey reports.

Thanks to the corporate disasters of the past year, the new financial lexicon includes expressions such as "Enronitis," "Tycosis" and "WorldCon." Now, playing on the common term "fallen angel," Goldman Sachs has produced a report dedicated to "flaming angels." A flaming angel is a company that has not only lost its investment-grade rating but has also defaulted on its debt. The lead contenders for the title are not surprisingly Enron and WorldCom.

Napoleon Rodgers, portfolio manager at Alpha Capital Management, says he will add agency bullets, Treasuries and high-quality corporates, using existing cash and new money to fund those acquisitions. The overall purchase will represent 11%, or $13.2 million of the firm's $120 million portfolio. Those purchases will be distributed between agency bullets, for $6 million, and Treasuries, for $5 million. Other purchases, accounting for 2%, or $2.5 million of the firm's portfolio, will be allocated to triple-A or double-A rated corporates.

Large piles of unclosed trades stocked against increasing volumes and a wave of new market players, particularly in the distressed market, have ignited a concerted effort to deal with the slow settlement times in the secondary loan arena. As it stands now, it typically takes more than 45 business days for a distressed trade to settle. That number is up from about 20 days in 1998. The increased counter-party risk associated with such delays is pushing the loan market to a point that risk management individuals are beginning to take a interest in reducing settlement times, explained Don Pollard, co-head of Credit Suisse First Boston's syndicated loan group.

A piece of 360networks was believed to have traded around the 23-23 1/2 level last week after the company received approval for its Canadian plan of reorganization. Chris Mueller, treasurer, said the company's secured creditors, which hold $1.2 billion in debt, should expect to receive $135 million in cash, $215 million in new notes and an 80% stake in the reorganized company. A confirmation hearing for the U.S. restructuring plan is scheduled for Oct. 1.

Kwu Scott, formerly of J.P. Morgan, has joined ABN Amro's investment-grade syndication team and will begin work today. The bank also brought on Susan Greenwood from Deutsche Bank and Alexander Byers from Bank of America at the beginning of August to join the bank's distribution team. In fact, nine of the 14 bankers on ABN's loan desk are newcomers as the bank bulks up on bodies in an effort to increase its presence in the loan market by building a solid origination, distribution and trading effort.

Advanced Medical Optics has secured a $135 million credit facility and issued $200 million in notes in order to complete its spin-off from Allergan. The financing was set up through the new Santa Ana, Calif., company rather than through its former parent so that Advanced Medical would not have too many inter-company relationships, according to Richard Meier, cfo. Setting up the financing this way also provided Advanced Medical with the opportunity to prove to the marketplace that it was a sound, stand-alone company, he explained.

Alliance Capital has promoted Michael Snyder to director of high yield, in charge of a group overseeing some $10 billion in assets, according to a person at the firm. Snyder replaces Greg Dube, who left Alliance last month (BW, 8/11). Prior to the promotion, Snyder had been a portfolio manager and senior v.p. at Alliance, which he joined last year. He has previously worked as head of high yield at Donaldson, Lufkin & Jenrette Asset Management and Bear Stearns Asset Management. He also worked for some 10 years in the high-yield money management group at Prudential Securities. He will report to Kathleen Corbet, ceo of fixed-income. Snyder declined comment.

A $1.85 billion multi-currency bank deal backing Ball Corp.'s $900 million acquisition of Schmalbach-Lubeca of Germany is expected to hit the market next month, and investors are licking their chops. Buysiders say the company is a solid play, and one banker whose bank is not leading the deal said the credit's institutional piece would be a home run. Deutsche Bank, Bank of America, BANK ONE and Lehman Brothers have landed lead roles on the deal. Raymond Seabrook, cfo of Ball, said in a conference call that the acquisition would be financed completely with debt.

The market buzzed with talk of a $50 million trade of Global Crossing's bank debt in the 15 context last week. Bear Stearns is believed to be one of the major participants in the trade. Officials at Bear Stearns could not be reached by press time.

ON Semiconductor recently issued $300 million in notes and reduced its bank borrowings from more than $1 billion to roughly $700 million in an effort to better compliment the cyclical nature of its business. The Phoenix-based semiconductor manufacturer chose to refinance a portion of its borrowings with notes because they are less sensitive to cyclical downturns, explained John Kurtzweil, cfo. "[The banks] provide a bridge to a more permanent capital structure," he added.

The bank debt ofQwest Communications International was believed to have traded around the 88 1/2 level last week after the company received relief from one of its covenants. The company's debt-to-EBITDA ratio was scheduled to drop from 4.25 times to four times at the end of the year, but an amendment increased the allowable leverage ratio to six times for the life of the loan, which has been pushed out for two years to May 2005. Had it not received the amendment, Qwest would have been in default of its credit agreement.