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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.

GE Capital,SunTrust Bank and Comerica Bank are shopping a $150 million bank facility for 21st Century Newspapers, a Michigan-based publisher of newspapers and publications. The credit backs the acquisition of the newspaper assets of Brill Media and consists of a $30 million revolver, a $45 million "A" term loan and a $75 million "B" piece. Pricing across the board is LIBOR plus 4%, one banker said, noting that Van Kampen Investments has already signed onto the deal. Officials at the banks either declined to comment or did not return calls. A spokeswoman for 21st Century did not return calls.

UBS Warburg closed the book on commitments last week for the financing package backing the $300 million acquisition of Nellson Nutraceutical by Fremont Partners and existing management. Some investors had been waiting for the rating agency write-ups, which emerged last Wednesday. "There is a relatively conservative capital structure, below three times leverage, and the "B" is attractively priced for the risk," one investor said. He believes the deal will not be flexed downward due to the small size of the tranche. An official at Fremont and a UBS banker declined to comment.

State Street Research is prepping its first ever collateralized debt obligation--a $400 million deal called Fort Point CDO scheduled to price today, says a CDO market participant. Salomon Smith Barney is underwriting the multi-sector transaction while State Street will act as the collateral manager. Ron D'Vari, director of fixed-income at the Boston-based asset management firm, referred calls to Allison Riley, a firm spokeswoman. Riley declined to comment. Brian Carosielli, a SSB banker in charge of the deal, did not return calls.

Dominion Bond Ratings Service hopes to obtain this year the Nationally Recognized Statistical Ratings Organizations (NRSRO) status granted by the Securities Exchange Commission. Greg Root, executive v.p and head of the U.S office of the Ontario-based rating agency, says he is confident his petition with the SEC will receive a favorable response by year-end. Only three rating agencies, Moody's Investors Service, Fitch Ratings and Standard & Poor's, operate under NRSRO status. Root says that although Dominion is allowed to do ratings without the status, the SEC regulatory approval is a necessary step in the U.S. to build up credibility and a large client-base of bond issuers. Mark Attar, the SEC's general counsel in charge of the Dominion application, referred calls to the office of public affairs. John Heine, a spokesman with the SEC, was unavailable for comment. John Nester, another SEC spokesman, did not return calls.

CIBC World Markets held a bank meeting last Thursday for Integrated Defense Technologies for an amended and restated credit facility backing the $146 million acquisition of the Gaithersburg, Md., operations of BAE Systems. The existing $45 million "B" term loan will be rolled into a new $175 million tranche, one banker said. Pricing on the existing loan is LIBOR plus 23Ž 4%, but this will be hiked up to LIBOR plus 31Ž 4% once the new cash is incorporated. CIBC also leads a $40 million revolver and a $40 million "A" term loan for Integrated.

Some managers are increasing the size of the structured note buckets in their collateralized debt obligations as they look to build par and diversify, and loan managers in particular have been seen buying credit-linked notes.

CypressTree Investments, a subsidiary of Harborview Capital Management, is looking to buy assets for its Hewett's Island CDO, a collateralized loan obligation that includes a wrinkle designed to minimize ratings volatility. More than 50% of the collateral for the $255 million CLO has been bought, with the end product set to consist of about 85% senior secured loans, 15% high-yield bonds and a small portfolio of structured finance products. Repeated calls to managers at CypressTree were not returned.

A few pieces of the bank debt of Horizon Natural Resources, formerly known as AEI Resources, was said to have traded in the mid- to high 50s last week after the company revised its EBITDA guidance downward by $60-70 million for the remainder of 2002. The revision puts future covenant compliance into question, and the company therefore has admittedly begun to speak with its banks to resolve the issue. Horizon has been hurt by operating difficulties at its Evergreen mine in West Virginia and by the unavailability of Section 404 permits in certain mines in Kentucky. Michael Nemser, cfo, could not be reached by press time.