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Barclays Capital is building up its London-based European high-yield business and is planning to hire traders and salespeople. The move comes in response to an increase in "fallen angel" credits, cross-over names and distressed debt, especially in the cable and telecom sectors, says a Barclays insider. Most recently, the firm hired a senior high-yield trader, Steve James, who joined from Schroder Salomon Smith Barney in London. James declined to comment.

The Blackstone Group has hired a stable of analysts for its recently formed structured finance group, Blackstone Debt Advisors. The addition of the four credit analysts and two financial analysts follows the hiring of Dean Criares earlier this year from CIBC World Markets as Blackstone seeks to manage a series of collateralized loan obligations. "Blackstone has been intrigued by the corporate debt markets for the last five years, and we have now established a group looking to invest in the senior secured leveraged loan asset class," said Criares, a managing director at Blackstone. He declined comment on whether Blackstone is currently working on a CLO vehicle.

UBS Warburg and Bank of America are holding one-on-one meetings with investors in New York and Chicago to shop the $175 million credit for Blackstone Capital Partners backing the acquisition of a majority interest in The Columbia House Company. A banker said one-on-one meetings are better when a credit has a story and needs explanation. Columbia House is moving away from selling compact discs into DVDs and though there is good cash flow, the story is complex and the company does not have solid asset coverage, said the banker. Pricing is a high LIBOR plus 41/ 2% on the $145 million "B" loan and on the $30 million revolver, though total leverage is only about 2.8 times.

Keefe, Bruyette & Woods has hired Jacques de Saint Phalle to a senior position in the fixed-income group, according to several fixed-income officials familiar with the situation. He joins from Bear Stearns where he was a managing director and head of high-grade syndicate. The hire is part of Keefe, Bruyette's effort to rebuild its fixed-income operation after it was devastated by the Sept. 11 attacks. The firm recently hiredKevin Meenan and Jim Cahill, as co-heads of fixed income, and has made new research hires as well.

MMC Enterprise Risk, a subsidiary of Marsh & McLennan the international insurance broker, has hired Colin Lally, formerly a top securitization banker at Nomura Securities International in London, as a senior transactor. Lally will join MMC next month and report to Henry Cooke, head of European enterprise risk management transactions, and with whom he worked at Nomura. Cooke joined MMC last year. Cooke says MMC aims to use insurance capital as an alternative to bank capital for corporates seeking to transfer risk to the capital markets. This is a relatively new business for Marsh, adds Cooke. He reports to Jamshid Ehsani, who heads the business in New York. Ehsani did not return calls.

MedSource Technologies, a Minneapolis-based provider of engineering and manufacturing services to the medical-device industry, completed a debt overhaul through an initial public offering, slashing annual interest costs by 75%. MedSource had $86 million of debt, of which $66 million was senior and $20 million was subordinated debt, said Paul Scolardi, corporate controller. While completing an IPO, which paid down debt accumulated through acquisitions, MedSource also put in place the new facilities, he added. Interest expense has gone from about $10 million per year to $2.5 million.

Morgan Stanley is ramping up its London high-yield desk, recently adding one salesman and a trader. The firm is also looking to add to its high-yield research team, say high-yield traders and salespeople. "They're trying hard to recruit there," notes one. So far, Morgan Stanley has hired Tom Crystal, a salesman, formerly of ABN AMRO, which integrated its high-yield and investment-grade businesses earlier this year. In addition, Brian Eastwood has joined from Goldman Sachs to trade distressed debt. Crystal and Eastwood, who could not be reached for comment, will report to Pedro Urquidi, head of high-yield sales and trading. A spokeswoman at Goldman was unable to confirm Eastwood's departure by press time. A spokesman at Morgan Stanley declined to comment.

Fixed-income officials are beginning to question whether a $200-400 million high-yield bond offering by chemical company Solutia Inc. will go forward in the first half of this year as company officials have said it will. Solutia was recently downgraded by Standard & Poor's, and one person familiar with the proposed deal says bankers are still reviewing whether they want to proceed with it, given the company's involvement in PCB-related litigation. Salomon Smith Barney andBanc of America Securities are leading the deal. Bankers at both firms either declined to comment or could not be reached.

Moody's Investors Service upgraded Flowserve's bank debt due to stronger operating and financial performance and the company's proficiency in integrating acquisitions as Flowserve incorporates the recently acquired Invensys' flow control division (IFC). Flowserve's $300 million revolver and $238.4 million term "A" loan have been upgraded from B1 to Ba3 and the same rating was assigned to the company's new $95.3 million term loan "A" add-on and $700 million term loan "C".

Daniel Scotto, former head of investment-grade research at BNP Paribas, is seeking "at least" $100 million in damages from his former firm in an NASD Dispute Resolution panel. Scotto claimed in a Wall Street Journal article that after recommending clients sell Enron bonds he was forced to leave BNP Paribas because the firm feared that such a recommendation would damage its investment banking relationship with Enron. BNP co-managed an Enron debt offering in Europe in the spring of last year, according to a claim filed by Scotto's lawyers Liddle & Robinson, a copy of which was obtained by BondWeek.

GenTek's bank debt ticked down to the 82 1/2 - 83 range following its first quarter earning results that reported weak revenue and default on its current credit agreement. The name has been moving in the 83-85 range over the last month. One trader estimated that more than $30 million of the name has traded over the past two weeks. The company is in default on its senior credit agreement because of non-compliance with certain covenants under that agreement. GenTek's lending group has the right to require accelerated repayments of the loans, but the company is currently working with its bank group to amend the credit agreement.