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Fitch Ratings has downgraded the $1 billion senior secured credit facility of XO Communications to C from CC, reflecting an increasing risk of default. On June 17, XO filed for Chapter 11 bankruptcy protection after failing to reach a restructuring agreement with potential investors.

Accredo Health recently obtained a $325 million credit facility through Bank of America to fund its acquisition of Gentiva Health Services. Joel Kimbrough, cfo, said the timing of the new financing encouraged the Memphis-based company to choose its long-time lead bank. Accredo had to secure the underwriting commitment from B of A in early January because the Gentiva deal stipulated that the completion of the acquisition could not be contingent on whether the company obtained the necessary financing, he explained, noting that the credit was syndicated afterwards.

Alan Peterson has joined Aetna Inc. in Hartford, Conn. as a portfolio manager overseeing the firm's roughly $500 million in high-yield assets, according to people with knowledge of the situation. He replaces Jean LaTorre, who was promoted to head of fixed-income after Tim Corbett left for Hartford Insurance Co. earlier this year. Peterson's last position was as high-yield portfolio manager for CIGNA, which has since spun off and renamed its asset management arm as TimesSquare Capital Management. However, he left that firm close to a year ago. Peterson did not return calls, and LaTorre declined comment.

Apria Healthcare Group's lenders convinced the Lake Forest, Calif., healthcare provider to amend its $175 million "B" term loan after bringing to its attention successful repricings by other issuers. The amendment resulted in 100 basis points being shaved from the loan's old spread of LIBOR plus 3% and an extension of the maturity by one year to 2008, according to James Baker, cfo. "The success of similar companies was brought to our attention by our financial institutions," he said. "But current market conditions and the improving financial strength of the company were the factors behind the repricing."

Bear Stearns has hired Ian Jaffe, a senior bank and finance analyst, from Morgan Keegan & Co. Earlier this year, Bear Stearns lost both John Otis, a senior bank analyst, and Ann Maysek, a senior financial institutions analyst, to Deutsche Bank (BW, 3/13). Doug Colandrea, who recently joined the firm from Morgan Stanley (BW, 5/26) and has taken over as investment-grade research chief, says Jaffe will cover at least commercial banks and brokerage firms. He is still determining whether to hire an additional analyst to cover finance companies, he says.

As analysts on the sell-side and at ratings agencies have been caught off guard by troubles at companies such as Enron, Tyco International and Adelphia, buy-siders say they are taking matters into their own hands. The buy-siders say they are increasingly exploring alternative means of gathering credit information in a climate where each week seems to bring a different company with an off-balance sheet skeleton in its closet.

The success of a bond offering last week to fund a joint chemical venture between Chevron Texaco and Phillips has surprised two senior analysts: a buy-sider at a large East coast firm and a sell-sider. The Chevron Phillips Chemical Company's 5.375% notes of '07 (Baa1/BBB+) was upsized to $500 million from $400 million, and received a very strong rating from both Standard & Poor's and Moody's Investors Service, both analysts acknowledge.

The high-yield market was softer overall last week, though cable credits (ex-Adelphia) enjoyed a slight rebound. Early in the week, rumors continued to circulate that Paul Allen, Charter Communications largest shareholder, might buy back some of the company's bonds, or even take it private. Here was some other action:

Carl Icahn says that the amendment to XO Communications' bank debt agreement, which has essentially halted the trading of the name, amounts to an ego play on the part of the company's bank steering committee. "They don't want me to buy the bank debt because the steering committee would be out of control of the situation," the renowned financier said of the state of affairs surrounding the restructuring of XO and the lockdown in the secondary loan market.

Rumors that WorldCom is planning on drawing down on its $3.75 billion revolver, which is set to expire at the end of this month, caused both bank debt and bond debt players to fret over their exposure to the company last week. As LMW went to press on Friday, there were no reports of the facility being tapped. "For all we know, some bond guys could have started the rumor, hoping to drive down the prices and buy the bonds cheaply," one trader said. The spread on the company's bank debt was wide at 92-97, and no trades could be confirmed.

Jarden, formerly Alltrista, has chosen Bank of America to lead its new $100 million credit facility over the incumbent, BANK ONE. Ian Ashken, vice chairman and cfo, said the Rye, N.Y., company decided to switch its lead bank because the new management had a historical relationship with B of A. The company also was pleased that the bank group had decreased to 10 banks because it is easier to work on amendments to the agreement, if need be, he noted. CIBC World Markets, National City Bank, Bank of New York, FleetBoston Financial, Harris Trust & Savings Bank, U.S. Bank, Allfirst Bank, Transamerica Business Capital andUnion Federal Savings Bank participated on the new deal.

Trading levels for Kmart's bank debt fluctuated briefly last week, falling a couple of points on the fear that Martha Stewart would be implicated for insider trading on ImClone Systems. One dealer said more than $20 million changed hands by Tuesday, with the 364-day facility moving in the 73-74 range and the three-year facility moving in the 67-68 range. By Wednesday, levels had recovered and the name was said to be quiet. Calls to the company's spokesman were not returned by press time.