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New Zealand's Guardian Trust Fund Management, with over NZD1 billion (USD569 million) in its domestic fixed-income portfolio, is considering purchasing and selling credit-default swaps for the first time in the coming months. "If this can enhance our returns, we'll be happy to go down that road," said Fergus McDonald, head of bonds and currency in Auckland. He continued that the fund is studying the instruments as an additional investment tool for its fixed-income portfolio and that if it goes ahead with establishing systems and preparing documentation, it could be trading within six to 12 months.

AXA Investment Managers, which manages roughly £16 billion in fixed-income assets, has been, and will continue to accumulate shorter-dated triple-B rated paper, mostly from the primary market. Denis Gould, head of the sterling investment-grade team, says he is especially interested in seeing new issuance fromNetwork Rail, the not-for-profit company established by the British government to replace Railtrack, which was put into receivership last year. Network Rail is expected to issue debt to pay off existing Railtrack debt and to fund project work. Gould is also anticipating long-dated issuance from LCR, the company that runs the channel link tunnel.

Groupama Asset Management is looking to increase its corporate allocation, and is warily eyeing financial credits. Dan Portanova, portfolio manager of $150 million, believes the economy will recover eventually, but says it is still vulnerable to exogenous shocks. As a result, he wants to see another month of data to be sure that unemployment is truly falling, before becoming more aggressive. Assuming that the futures market was correct last Monday in betting on a year-end Fed funds rate of 2.25-2.50%, Portanova will have upped Groupama's corporate exposure by 10% by that time. Groupama will sell U.S. government securities to raise the necessary funds. Names Groupama will look to add include Wells Fargo, whose 6.125% notes of '12 (Aa2/A+) were trading at 89 basis points over Treasuries last Monday. Portanova says he will probably look to add either the five- or 10-year maturity sectors, and was considering buying the bonds last Monday. Portanova likes Wells Fargo in part because its mortgage business is still strong due to a resilient consumer and housing market.

Loan market trivia: Which loan market trader recently won a Tony Award for Best Musical for his role as one the producers of Thoroughly Modern Millie? Answers can be emailed to msell@iinews.com and winners will receive a hearty congratulation for their market acumen.

George Schupp, portfolio manager withU.S. Bank Asset Management, formerly known asMississippi Valley Advisors, says he will rotate 5% of the firm's $2 billion portfolio, or $100 million, from Treasuries into corporates when single-A rated corporate bonds widen by 50 basis points. Single-A bonds were trading at an average of 150 basis points off the curve last Tuesday. He says he is uncertain as to when the spread widening may happen. He argues that high-quality corporate bond spreads are tight due to a particularly difficult corporate environment given the widespread regulatory and ratings problems within the sector.

This chart, provided by Citibank/Salomon Smith Barney Inc., tracks bid-ask prices for par credit facilities that trade in the secondary market. It also tracks facility amounts, ratings, pricing and maturities.

The recently syndicated deals for Metro-Goldwyn-Mayer Studios and TriMas have broken in the last two weeks, and the paper has been scooped up by hungry investors. Both names have been trading in 101 territory, according to dealers. MGM, which broke this week, was reported to have traded more than 10 times by Tuesday afternoon. Market players explained that prices for decent credits have been driven up as paper starved investors look to fill their baskets.

RBC Capital Markets is working toward closing its debut $400 million collateralized loan obligation early next month and has hired Nicholas Daifotis as managing director and head of high-yield origination and capital markets as part of the group's ongoing build-up of its acquisition financing for the middle market. "Hiring Nicholas Daifotis [from Barclays Capital] is a prelude to hiring more on the high-yield origination side of the business," said Ken Kencel, co-head of RBC Leveraged Capital. RBC Capital also is talking to some senior-level people about running the loan syndication side of the business, he added.

The $1.05 billion in new bank debt for Six Flags Theme Parks is well covered in the event of a default scenario, but the holders of $1.7 billion of unsecured debt could be in for a hairier ride. The bank debt is rated Ba2 and debt-to-EBITDA is inside 2.5 times, but total leverage is around six times and so the unsecured is B2, explained Moody's Investors Service senior analyst Glenn Eckert. One concern cited by Eckert, though, is if Six Flags ran into operational issues and had to be an asset seller. As the premier buyer and consolidator, financial sponsors would be a possibility, but Six Flags usually buys competitors, he explained.

SLI, a lighting company dealing in lamps and fixtures, was bumping up against the end of waiver period and looking for a long-term amendment as LMW went to press Friday. The name has drawn attention in the secondary market over the past two weeks, with big pieces reported to have traded in the 40s. Last week a $15 million piece was believed to have traded out of a Japanese Bank in the 45-46 range. Traders said that a $20 million piece traded in the 46-47 range two weeks ago.