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Favorable industry dynamics, including reimbursement levels that have bounced back from the dark years of the Balanced Budget Act, support Community Health Systems' $1.25 billion senior secured credit facility. "Reimbursement is back in line with traditional levels and third-party payor rates remain favorable," said Luke Coha, analyst at Fitch Ratings. Community Health, a rural hospital management company, is refinancing its credit facility to improve interest expenses and extend maturities. The new credit, which consists of an eight-year, $800 million "B" loan and a six-year, $450 million revolver, has been assigned a BB rating by Fitch.

Active trading of names in the workout process and a drive for amendments that save a credit from nonperformance can impede a company's progress towards workout salvation, according to panelists at the Distressed Debt Investing 2002 conference held in New York last week. In a session dubbed "Sell-Side Perspective: Knowing When to Hold, Draw or Fold," players pulled apart the negative impact secondary bank loan trading can have on a smooth workout process. Trading activity that enlarges the circle of people working out the credit and amendments that enable some institutional players to keep the credit are the biggest things that gum up the works or workouts.

Brian McManus, head of collateralized debt obligation research at Merrill Lynch, and a frequent Institutional Investor Fixed-Income All-America Research Team winner, has retired to Miami, according to sister publication BondWeek. Dan Castro, the asset-backed securities research chief, said he is filling in for McManus as there are no immediate plans to replace him. He added that McManus, 44, likes to travel and owns property in Eastern Europe and Nicaragua.

More than $50 million of Silgan Holdings traded around the 100 1/2 level last week. Traders said the food packaging company is a well-known credit that investors are comfortable with. When a shockwave like WorldCom goes through the market, investors retreat to names they are comfortable with--names with no news, one dealer explained, adding that credits like this just bounce along and remain untouched. At the end of last week, the paper was quoted in the 100 1/4 to 100 3/4 range.

Fleming Companies received strong support from the institutional segment of the bank loan market as it came to market last month with a bank, bond and equity financing package. According toMatt Hildreth, treasurer, equity and bond investors turned colder as the offerings were proceeding. "Safeway missed their earnings the day before the equity offering, so [proceeds there] were a little less than planned," Hildreth said. "We also got the bonds done, but at the high end of price talk as the market backed up a little."

Tyco International's February 2003 bank debt traded in the 87-89 range last week, down from the 94-95 level the previous week. Dealers had opposing views on what was causing the paper to move. One said that market players were worried the company would not be able to complete its spin-off of the CIT Group because of the weak equity market. Another pointed out that trading levels for the bonds have fallen an average of 15 points, causing pressure on the bank debt. But others suggested that the downturn had more to do with a cloud of suspicion hanging over any company that had a hint of accounting issues. Calls to the company's spokesman were not returned by press time.

Moody's Investors Service has added Jim Brennan as a collateralized debt obligation analyst in its New York office. He will report to Isaac Efrat, managing director, and will rate various CDO transactions from cash-flow deals to synthetic transactions, including arbitrage and market value deals. Brennan says he started two weeks ago and that his position is a newly created one. He joins from Mutual of Omaha in Nebraska, where he reported to Donna Ennis, v.p. of structured securities. Mary Kavan has replaced him there, he says.

Moody's Investors Service has declared the U.S. wireless industry a higher credit risk and will engage in an intense industry review that may lead to revised ratings on several wireless companies. The rating agency's primary concerns include doubts on long-term subscriber growth, market saturation and increased competition.

Xerox's recently renegotiated credit line saw some serious action in the secondary loan markets last week and, as LMW went to press, one desk had quoted the new paper off three points due to reports that the company will restate its revenue once again. "They are trading all over the place," one trader added. Both Lawrence Zimmerman, cfo, and the company's spokesperson could not be reached by press time.

Just as leveraged buyout funds were the outstanding asset class of the early 1990s and venture capital funds led the pack in the latter half of the 1990s, the first five years of the millennium will belong to distressed funds, according to Wilbur Ross, chairman and ceo of WL Ross and Co. And the distressed funds that will really succeed are those funds equipped to deal with the defaults of smaller companies, Ross said. That is because the majority of defaults in the current crop involve less than $250 million in liabilities, and these smaller companies are under-researched by Wall Street, which does not have the analytical resources to deal with one new bankruptcy every two or three days, he explained. As a result, the vast bulk of sell-side research is focused on a handful of big names, like Kmart and Enron.

BNP Paribas is on the lookout for asset-backed analysts for its London-based ABS research team. One of the new hires will replace Ingrid Blauer, the former head of ABS research who left the firm about a month ago for personal reasons, says a Paribas insider. Another will be an addition to the team, bringing the total number of ABS analysts in London to three. Currently, Leo Wang, who has been at the firm for some time, is handling all the ABS research duties.

Approximately $639 million in collateralized loan obligations for PIMCO and Blackrock Financial Management are likely to price this week, and more than $1 billion from three other managers is on the way. But a stocked pipeline may be crimped by a dearth of equity investors and solid assets, spelling doom for many of the dozen or so new CLOs being structured. "Raising equity is very tough if you don't have the experience," said David Hinman, executive v.p. and portfolio manager at PIMCO. "Of the 12 to 14 CLOs in the market, about half won't get done. This is healthy, as it imposes discipline."