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Dresser plans to pay down approximately $23 million of its eight-year, $455 million "B" term loan by the end of the month. The company will pay down $30 million as part of a debt reduction strategy to combat the economic slump, said James Nattier, cfo. "Currently, in the depressed economic environment our focus is on repaying debt," Nattier noted. The reduction will be funded with cash on the company's balance sheet. The "B" piece has no call protection.

The $475 million Flexi-Van credit led by Fleet Bank and Scotia Capital is being allocated this week and will move into the secondary market next week after adjustments were made to the structure. The $325 million revolver was downsized by $25 million to $300 million with a commensurate increase on the $100 million "B" term loan to $125 million, a banker noted. The credit refinances existing debt and backs the Kenilworth, N.J., company's $180 million acquisition of the chassis leasing businesses of GE Capital's TIP unit, he added. Pricing is LIBOR plus 2 1/4% on the three-year revolver and LIBOR plus 3% on the five-year "B" loan, with a 1/8% upfront fee on the "B."

Wachovia Securities is reportedly in the market with a $115 million loan for Precise Technology, a Code Hennessy & Simmons portfolio company that manufactures precision injection molds and molded plastic components. The loan includes a $35 million borrowing-base revolver and a $50 million "A" loan, priced at LIBOR plus 4%. A $30 million institutional piece has a LIBOR plus 4 1/2% spread. A Wachovia spokeswoman declined to comment on the transaction and Brian Simmons, a partner at the private-equity shop, did not return calls. The leverage levels are 2.3 times and 3.7 times, according to an official familiar with the situation.

Wireless names have firmed up in the secondary loan market in the path of industry-bellwether Nextel Communications, which has crawled up roughly 10 points over the last month and was trading at trading at 88 1/4 this week. Traders said a study that claimed cell phone usage would double by 2006 also contributed to the positive run. The source of this research could not be determined.

By Tom Groenfeldt

Tesoro Petroleum's bank debt has fallen from the low 90s to 84-85 1/2, with a few small trades taking place in that range. The company is currently in negotiations with its lending group to amend its bank covenants. One trader suggested that the bank group was looking to take out all its existing covenants and replace them with minimum EBITDA and maximum capital expenditure clauses. Market players predicted that levels would continue to slide. "I think that it's going to march its way to the down into the 70s. There's just too much debt there," one trader said. Calls to Gregory Wright, cfo, were not returned.

This week's Guest Column was written by a derivatives lawyer in London who wishes to remain anonymous.

Risk And Return In Intrinsic Time

U.S. dollar/Canadian dollar risk reversals flipped last week as the greenback appreciated against its Canadian counterpart and investors bet that, for the short-term at least, the dollar will remain strong. Twenty-five delta risk reversals shifted to 0.15 vol in favor of dollar calls/Canadian puts from 0.15 vol the other way around. The dollar rose to CAD1.585 Thursday from CAD1.56 Monday in New York.

Merrill Lynch is gearing up to issue a capital guaranteed product in Hong Kong that employs look-back resetting cliquet options and plans to sell the structure through the Bank of China and its associate banks, along with Bank of America, Standard Chartered Bank as well as its own branches. John Robson, director of structured products in the global equity markets group in Hong Kong, said Merrill recently issued the first such structure in Hong Kong and plans to link this one, its second, to a basket of Chinese stocks. The note is expected to be issued in late November.

Luc Faucheux, a senior interest rate options trader at CDC IXIS Capital Markets North America, has joined Salomon Smith Barney as v.p. in fixed-income derivatives research. "The idea was to bring someone in with a strong quant background, but also someone with trading experience, to have someone who can better understanding trading issues and come up with more practical ideas," said Yann Coatanlem, head of fixed-income derivatives research at Salomon in New York. Faucheux had previously been a quantitative analyst at what is now Mizuho Bank.

Swiss Re Financial Products has structured a bespoke forward-starting weather derivative for Petro, the heating oil subsidiary of Star Gas Partners. Bill Windle, senior v.p., weather derivatives at Swiss Re in New York, said Swiss Re is able to offer rolling strikes and a longer duration than normal, in this case for four years, because as an insurance company it is better able to mitigate and warehouse risk.