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As the $565 million "B" loan for Corrections Corporation of America (CCA) breaks into the secondary market, Moody's Investors Service has upgraded the rating to B1 from B2. The successful Lehman Brothers led-refinancing is a key factor in the upgrade, as much of the CCA debt was maturing at the end of this year, and there was refinancing risk. With this done, CCA will have amortization increasing from $15 million to $27 million over the next four years, and will have no significant payments before 2008, thus providing the company with a more laddered debt maturity schedule, according to Moody's.

Spreads on institutional term loans are dropping to the lowest levels since the second quarter of 2000 even below pro rata pricing and the tightening is becoming uncomfortable for some institutional buyers. Raging demand in the "B" loan market and a continued lack of appetite for pro rata paper has spreads converging on deals such as the one led by CIBC World Markets and Bear Stearns backing Willis Stein & Partners purchase of Roundy's. The credit offers LIBOR plus 3% and LIBOR plus 31/ 4% for the prospective "B" and pro rata, respectively, said one banker. J.P. Morgan and Morgan Stanley last week cut pricing on the heavily oversubscribed $350 million "B" loan for Seagate Technologies 1/2% to a skinny LIBOR plus 2%--the same as the $150 million pro rata.

ON Semiconductor traded up to 97 last week after the company announced that it would pay down part of its term loan with proceeds from a $300 million senior secured note offering. Bids have been rising over the past month with more than $100 million changing hands, dealers said. One dealer referred to the name as a "dead cat rising," after discussing how the credit had traded as low as 68. The name was pulled down by general fear of a semiconductor meltdown in the fall of 2001, explained one trader. The new notes mature in May 2008 with a coupon of 12%.

Fort Worth, Texas-based Range Resources, an oil and gas company, has refinanced its bank line and trimmed the number of banks in the group. "We had 12 banks in 1999, but that was for a $300 million facility, which we scaled back to $120 million," said Rodney Waller, senior v.p. of Range. "Having less banks makes it more manageable and the paperwork easier," Waller commented. He declined to name the banks no longer in the syndicate. The bank group is now seven, and consists of BANK ONE, J.P. Morgan, Credit Lyonnais, Fleet National Bank, Fortis Capital, Bank of Scotland, Compass Bank and Natexis Banques.

J.P. Morgan and Deutsche Bank will launch another add-on credit for Riverwood International this summer, hot on the heels of a recently completed $250 million add-on term loan from the banks. The institutional loan, expected also to be in the region of $250 million, will hit the market when Riverwood completes a $350 million initial public offering in the summer, said a banker. "There is a possibility of an additional term loan," said Steve Myers, a spokesman for the paperboard packaging company. The IPO will be used, with the new anticipated loan, to repay outstanding senior and subordinated notes and portions of the revolver, he said.

Deutsche Asset Management has hired Greg Croll as head high-yield trader for its Philadelphia office. He joined last week, reporting to Andrew Cestone, portfolio manager and head of high-yield. Croll's most recent position was as New York-based managing director and head of fixed-income trading at ING Barings Securities, which shuttered its operation about a year ago. He declined comment, and Cestone did not return calls. A fixed-income official close to Croll says he wanted to return to the buy-side, where he spent five years, also at ING.

Recovery for lenders on Mobile Storage Group's new $200 million credit would be inadequate in a default scenario where the collateral declines and the line is fully drawn, according to Standard & Poor's. The ratings agency has assigned a BB rating to the credit, which comprises a $60 million, five-year revolver and a $140 million, seven-year term loan and was launched by Credit Suisse First Boston andLehman Brothers on May 3.

Deutsche Bank is in the market with a $50 million add-on institutional tranche for credit card information processor Transaction Network Services. Launched at the end of last month, the six-year credit is priced at par with a spread of LIBOR plus 33/ 4%, a banker said. Deutsche Bank underwrote the original $150 million loan backing Chicago-based GTCR Golder Rauner LLC's leveraged buyout of the company last year. Questions were referred to CFO Henry Graham, who did not return calls by press time. The existing $100 million "B" loan is priced at LIBOR plus 31/ 2%. Bank of Tokyo Mitsubishi and Heller Financial are syndication agent and documentation agent, respectively, for the credit. Deutsche Bank officials declined comment.

Barclays Capital is in the market warehousing European collateral for a Euro$350 million collateralized debt obligation--originally slated for Euro$450 million but downsized, according to dealers, because pricing on attractive bonds has tightened in Europe. Faith Bartlett, portfolio manager at Barclays, did not return calls by press time. The deal is reportedly structured to comprise a majority of leveraged loan assets, but as with most European cash flow arbitrage structures, the deal also has bonds in the collateral mix as loan assets are scarce. "The bonds are pricing too tight now so they reduced the deal," said a market player, who said Credit Suisse First Boston is now shopping a new structure for the firm. CSFB officials did not return calls by press time.

The Bond Market Association, the New York-based-bond dealer trade group, is studying the feasibility of opening a Tokyo office to help facilitate interaction between its members and regulators in the Japanese market. Micah Green, president, says he hopes to have the study done by the July board meeting when he says the matter can be put to a vote. Green says that over the past several months he has had conversations with board members who have said that the growth and importance of the Japanese repurchase agreement markets, as well as the securitization and e-commerce markets, warrants the BMA's presence in Tokyo.

Senior corporate bond officials at Banc of America Securities are considering starting a proprietary hedge fund that would invest in the credit markets, according to an official at the firm. He declined further comment, and referred calls to Tara Burke, a firm spokeswoman, who declined comment. One fixed-income official familiar with the situation compares the proposed vehicle to UBS Principal Finance (see story, page 2) and to CLCM Credit Management, a new multi-billion-dollar operation just started by Credit Lyonnais (BW, 4/14), in that it would use the investment bank's capital, but be independent from the firm's secondary trading operations. The possibility of a B of A vehicle modeled after UBS Principal Finance and CLCM Credit Management is the latest sign that investment banks are increasingly investing their own capital in the credit markets.

Calpine's "B" term loan is now in retail syndication with investors being offered a 1/4% upfront fee. Funds that committed before the retail round received a 11/ 2% discount, said a banker. The spread on the "B" is still LIBOR plus 33/ 4%, and even though the loan is now subscribed, the pricing is unlikely to be changed again, he added. The original terms were altered substantially after investors balked at the risk of lending to the embattled power generator, investors and bankers said. The originally floated LIBOR plus 23/ 4% spread was increased, some added collateral was thrown in and an equity offering has been announced that will provide some added liquidity, said a banker.