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Total investment grade issuance for the week was $12.5 billion, with a big surge as a combination of Greenspan's testimony and better-than-expected economic data made spread product more attractive for investors. Highlights of the week include the 3-tranche $3 billion deal for National Rural Utilities (A2/A), which had a tough start but ended up pricing 5-7 bp inside of original price talk as the market mood improved. Heinz (A3/A) also took advantage of the surge in demand for corporates bringing $1.25 billion of 10- and 30-year debt into a hot market. The deal was a blowout, launching and pricing in the space of a few hours. Despite the high profile accounting blowups that have plagued some of the benchmark borrowers in the corporate bond market, there is still clear appetite for better quality borrowers and investors still have money to put to work.

Fitch Ratings has downgraded Williams Communications Group's senior secured credit facility to CCC- from CCC+ with the rating on negative watch. The action is the result of discussions with the bank group regarding the restructuring of debt that could result in default. After announcing the company would not file for bankruptcy, Williams has indicated that Chapter 11 is now under consideration. Deborah Trevino, a Williams' spokeswoman, said the downgrade is a reflection of the announcement and current market conditions, but declined comment on whether there is a timeframe for resolution of the debt-restructuring talks. She noted Williams has been committed to reducing leverage since the third quarter of last year.

A total of $40 million of Williams Communications' bank debt traded last week following announcements of a possible Chapter 11 bankruptcy filing, traders said. ABN Amro auctioned off $35 million of the name in the 57 range on Monday as first reported on the LMW Web site. Credit Suisse First Boston was rumored to have traded a $5 million piece at 60 later in the week. Calls to officials at ABN Amro and Williams Communications were not returned. A CSFB spokesman declined to comment on the firm's reported participation. The name had fallen from the 63 range, where it had been trading two weeks ago. Williams is the latest company to be affected by the telecom sector shakeout, which includes names such as Global Crossing and McLeodUSA.

There was a firmer tone overall last week, with wireless and cable particularly strong. Several new issues were priced, including a $375 million deal for Corus Entertainment. Here was other action:

Though recent spread volatility in the high-grade bond market has chased away a number of potential issuers, sell-siders remain convinced that 2002 investment-grade issuance will come in close to the $447 billion seen in 2000. Such a total would be well short of last year's $684 billion, but far better than last month's numbers would seem to indicate. Projected over a full year, February issuance through last Wednesday morning would translate to a total of only $340 billion, says Vince Boberski, strategist at Dain Rauscher in Chicago.

Goldman Sachs and Citibank's $1.2 billion credit for SC Johnson Wax has snared a handful of banks for the $550 million pro rata while the "B" is attracting strong buyside support. BANK ONE has signed on for 20% of the total credit, GE Capital, ABN AMRO, and Royal Bank of Scotland have signed on for $100 million pieces while Bank of Tokyo Mitsubishi has taken a $50 million bite. Launched last week in London and New York, the $650 million "B" tranche is also attracting solid support, said a banker following the deal.

John Horner has leftLehman Brothers and joinedJ.P. Morgan Securities as its new 15-year and agency adjustable rate mortgage-backed securities trader. Horner will be a v.p. and report to residential mortgage group chief Kevin Finnerty. He will replace veteran MBS trader Tom DeNunzio, who Finnerty says is looking at other opportunities within the organization, stressing that DeNunzio's decision was voluntary. Horner will also fill the role of agency backed ARMS trader, a slot J.P. Morgan has been looking to fill for sometime, says Finnerty.

Kmart's debt levels fluctuated again last week as investors continue to gauge the value of guarantees that market players are saying the company's subsidiaries will provide on the bank debt (LMW, 2/18). The name began last week with $5 million trading in the 60-63 range down from the 68-71 two weeks ago. After hitting the 62-64 level mid-week, the credit popped up again with $20 million of the name trading in the 63-65 range, said traders. Buyers and sellers could not be determined. Lehman Brothers is rumored to be compiling a report on the retail chain's subsidiaries to shed light on the value of guarantees on the parent company's debt although a bank spokesman denied knowledge of such research.

Lehman Brothers has reassigned Tom Bernard from his role as head of investment-grade and high-yield sales and trading, in a bid to beef up its high-yield origination business, according to Bill Ahearn, a firm spokesman. Bernard will assume additional high-yield duties, working as co-head of high-yield capital markets alongside Rob Redmond, who had been the sole head. He will no longer work with the investment-grade team.

Low cash flow margins should be one of the main focus areas for potential investors in the $350 million senior secured credit for Cumulus Media, according to Moody's Investors Service, which has assigned a B1 rating to the credit. Revenue at the company is suffering from more than just a soft advertising environment, said Dominic Ward, analyst at Moody's, noting that issues at specific radio stations are causing overall low revenues. J.P. Morgan is leading the deal, which is in the market.

Incapital, the Chicago-based underwriter of InterNotes--corporate bonds sold at par to retail investors--is set to announce the addition of several new issuers to its client roster in the next two months. Tom Ricketts, ceo, says he will likely announce two to three new issuers this month, and two to three more in April. He would not disclose names or even sectors of the companies, though he says each is a household name, and each will register a shelf of at least $1 billion.

Steel Dynamics picked J.P. Morgan and Morgan Stanley to lead a $550 million refinancing that includes $350 million of bank debt, after previous lead Mellon Financial sold a portion of its loan portfolio, including the old Steel Dynamics deal. Tracy Shellabarger, v.p. and cfo of Fort Wayne, Ind.-based Steel Dynamics, said, "Mellon sold loan portfolios to GE Capital a couple of months ago." With that relationship gone, the company shopped elsewhere.