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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.

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.