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UBS Warburg launched syndication of the $190 million credit for Herbalife last Thursday. The credit is facing a tough reception with investors asking where the security is, but bankers believe the paper starved "B" market will carry it through syndication. Pricing is slightly lower than market rumors suggested on the $165 million term "B" loan. A banker said pricing is LIBOR plus 4%, though there was talk last week of LIBOR plus 41/ 4%. Investors described Herbalife as asset light, and there are concerns that the security is inadequate. But bankers said the company "generates enormous free-cash flow." Investors concur that in today's market the cash flow aspect will be enough to drive the deal through syndication.

Last week was flat overall in high-yield, and traders said 90% of the trading was in bonds of Adelphia Communication. In the primary market, PacifiCare announced it would try to issue again after a planned offering was called off last summer. A deal by Trump Hotel & Casinos was still waiting to price at Thursday's close as traders remained skeptical that it would get done at all. Here was other selected action.

Bank of America, J.P. Morgan and Fleet Bank's $600 million "B" loan for Metro Goldwyn-Mayer-Studios sold out on the day of launch in Los Angeles last Tuesday, as the institutional market continues to burn up available credits. The "B" was structured to tap the hungry institutional market as pro rata lending continues to contract, said a banker familiar with the deal. Pricing is unlikely to depart from the LIBOR plus 3% spread on the "B" loan though despite the rapid subscription, she noted.

Ex-Morgan Stanley junk-bond king Dwight Sipprelle is said to be in the market for high-yield bonds and leveraged loans through his new venture, ARX Investment Management. Sipprelle, based in New York, declined to comment, but a trader said he was in the funding process. An official familiar with the situation, said "leveraged loans, both par and distressed are in the universe of assets ARX is looking to invest in." One distressed trader described Sipprelle as "a man in the know," who has already closed on one fund but is now raising another. Another said, "He's a serious player!"

Deutsche Bank has lost another member of its corporate bond research group with the resignation of Peter Mullen, who was a v.p. covering the retail and consumer products sectors. A former colleague says he has joined Westmoreland Capital, a New York-based hedge fund, and has not yet been replaced at Deutsche Bank. Mullen could not be reached, and David Folkerts-Landau, the firm's head of markets research based in London, did not return calls.

Southwest Airlines has tacked on $75 million in additional financing after the J.P. Morgan and Citibank-led credit was oversubscribed. "The demand was there," explained Laura Wright, v.p. of finance for Southwest Airlines. "We were going to go out for $500 million and it was oversubscribed. With the current environment, we felt that more liquidity was good." The company refinanced a $475 million, five-year revolver that expired this month.

WorldCom met with its seven biggest lenders last Thursday as market players speculate that a $750 million term loan could be a part of the company's new financing plan. WorldCom, does not need the cash from a term loan, but rather the backstop liquidity, a trader said. The company will look to avoid the term loan because it comes at a higher price, a dealer explained. The bank group will probably balk at a revolver because if the company decides to draw the line they will have the same exposure to the company as a fully funded term loan without a higher price to compensate for the risk, he noted.

CIBC World Markets is using the supply/demand imbalance in the market to its advantage by shopping two deals together --Boyd Gaming, an attractive refinance credit, and the less attractive, Borgata Casino deal. "We'll give you special consideration if you take both," a buysider said, describing the pitch by the firm to package the Borgata deal with the Boyd deal. The strategy to help finance the Borgata credit, an Atlantic City-based construction finance deal, is designed to assuage concerns about project finance loans. "Borgata's a much riskier credit and even if the project comes in on budget, it doesn't mean it will come in on time," said a portfolio manager who still hasn't decided whether or not Boyd's worth the Borgata risk. The buysider said commitments are due at the end of the month, following launch of both institutional pieces two weeks ago. Officials at CIBC declined to comment.

Bill Demchak, who resigned last month from his position of global head of structured finance and credit portfolio, says he has not burned his bridges with J.P. Morgan Securities and associates say he could, if he decided to, come back to the firm after the summer. Reached at his home in Manhattan, the high-profile banker says he is on a sabbatical for an undetermined length of time. Chris Lemko, a spokeswoman with the firm, says management at the bank is encouraging Demchak to come back. Demchak says he wanted to take the summer off as he approached his 40th birthday with the intent of spending more time with his family. Someone at the bank, familiar with his move, says that Demchak, who has two kids, a boat and a house in the Hamptons, was offered a sabbatical as a way to accommodate his request to take the summer off. "He could be back four or five months from now," says this source. Demchak declined to indicate if he had such plans when the summer is over.

J.P. Morgan and Credit Suisse First Boston's credit for TriMas, backing the spinoff from Metaldyne is offering a $300 million "B" piece, and could take out Metaldyne debt at 101. That twist is playing well with investors who bought in the mid-80s when Metaldyne was struggling, noted one buysider. Heartland Industrial Partners bought Metaldyne in November 2000 and now wants to separate the TriMas business, as it has little strategic fit within Metaldyne, said a banker. Separating the two will enable both to grow, he added.

The high grade calendar picked up on the week, with $11.6 billion in new deals priced. Several interest rate sensitive companies hit the market as fears that increasing Treasury supply and a reviving economy would raise borrowing costs later in the year. Notable names to come to market in that sector include Household Finance ($2.5 billion), CountryWide Home ($1 billion), AIG Sunamerica ($1.2 billion) and Wells Fargo ($500 million). The other notable deal in the market was Petronas, which priced the largest Asian global ever at $2.75 billion (including 1 euro and 2 dollar tranches). Petronas benefited from attractive spreads relative to U.S. oil companies as well as Malaysia's positive sovereign outlook.

XO Communications' bank debt has plummeted from the high 60s to the low 50s with a rumor that Forstmann Little & Co. is pulling out of its proposed deal to invest $800 million in the company, along with Telefonos de Mexico, for an 80% share. Traders said that approximately $15 million traded in the 51 range.