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Trading started slow last Tuesday after the holiday, but volume was normal by mid-week. It was a soft week overall, though energy, healthcare, gaming and supermarkets were well bid. Here was other action.

Invesco is working withLehman Brothers on a $300 million collateralized loan obligation comprising roughly half European loan collateral and half U.S.-based collateral as larger leveraged buyouts drive bigger bank deals in the European new issue market. Invesco is still in the process of ramping up the deal and will be looking to close the transaction by the end of next month. "We are beginning to see the European [loan market] maturing. It doesn't have the size or liquidity of the U.S. market, but it has the same type of investment advantage," said Brian Mitchell, product manager at Invesco, explaining why the firm is buying up European collateral.

J.P. Morgan has created a debt capital markets banking position to concentrate solely on the U.K. market and has hired Nick Denman, previously a debt banker at Goldman Sachs, to fill the slot. John Mayne, J.P. Morgan's London-based co-head of DCM Europe and to whom Denman will report, says the position was created to increase the firm's coverage and to respond to the enormous opportunities for sterling-, dollar- and euro-denominated bond issuance in the U.K. market. Mayne says he is not planning any additional hires at the moment, but will continue to monitor the markets closely and respond to growth areas. Calls to a Goldman spokeswoman seeking the name of Denman's replacement were not returned.

Kmart's bank debt climbed last week from a high of 68 two weeks ago to the 70-71 range by last Wednesday withDeutsche Bank rumored to have participated in a $15 million trade on Tuesday. After a strong week, the name dipped slightly to 68 1/2 last Thursday with a $5 million piece trading. Buyers and sellers on Thursday's trade could not be determined by press time.

Lamar Media has drawn down $200 million from an incremental facility instead of its $350 million revolver to take advantage of the option while it was still available. The provision for the incremental facility, written into an original $1.4 billion credit facility, affords the company access to a total of $400 million at the discretion of the bank group. The company wanted to secure $200 million of the incremental facility now because it could not be guaranteed access to the funds later, explained Keith Istre, cfo of Lamar. He declined to be specific about why the line may not be available to the company in the future. The company will use the $200 million to support current and future acquisitions.

Royal London Asset Management, which manages £7 billion in fixed-income assets, will launch a high-yield fund in the second half, specializing exclusively in European credits. Andrew Carter, cio, says the launch is a response to market demand as investors are expressing an interest in venturing down the credit rating spectrum. Jonathan Platt, head of fixed-interest investment management, will run the new fund. Currently, the firm manages only an undisclosed "small amount" of high-yield assets and the size of the new fund should be about £25 million. The fund will invest in sub-investment grade credits, illiquid debentures, crossover credits and some investment-grade debt. Separately, the firm is looking to hire a fixed-income portfolio manager to replace Paul Doran, who has moved over to head the quantitative team concentrating on equities.

ABN Amro is not trading European high yield since the members of its approximately 10-strong London-based high-yield team have either left the firm or joined other departments, says one its former analysts. The group was integrated into the firm's leveraged finance unit last month (BW, 1/28). Vincent Keith, head of high-yield trading, and Ray Stotlemeyer, head of high-yield research, have both resigned, the analyst says. Members of the team were given the option of a severance package or reassignment. "[ABN is] not trading high yield," he says, adding that eventually high-yield sales and trading will be migrated to other fixed-income desks. Alex Evans, an ABN spokesman, denied the firm had suspended trading high yield--even temporarily, however other market players say the firm's absence is hardly noticeable.

Fitch Ratings has downgraded AES' senior unsecured debt to BB from BB+ due to a limited liquidity schedule in the face of high leverage. The company will need to reconcile the near-term maturities on $300 million in bonds, an $850 million revolving credit facility, and a $425 million bank loan in the next 12 to 18 months, said Mona Yee, Fitch analyst. Fitch supports the company's plans to sell some of its assets in 2002, noting such a move would improve its situation. "Unless they can sell the assets, they will be working with a very tight rope," said Yee.

Jason Kravitt, partner with Chicago-based law firm Mayer Brown & Platt, and one of the three founding members of the recently formed American Securitization Forum, says his association is likely to appoint an executive committee next week, during its last organizational-stage meeting. The number of future members and its classification by trades between issuers, underwriters or other groups, such as rating agencies, is still subject to change, according to Vernon Wright, acting chairman for the forum and senior vice-chairman with MBNA America. He says the committee currently comprises 27 professionals, with 11 issuers, eight investors, five investment bankers and three rating agency analysts. George Miller, senior v.p and deputy general counsel with the Bond Market Association, the group that initiated the creation of the new securitization forum, did not return calls. Founding member Greg Medcraft, managing director and head of securitization for Société Générale, was travelling and unavailable for comment.

Banks are eyeing very carefully the issue of cheap credit lines as Computer Associates International has joined Tyco International, Qwest Communications International and Enron as borrowers that have tapped commercial paper backup lines. The increased use of dirt cheap lines that are typically not expected to be tapped is likely to result in increased pricing and a hard look at tenors on the lines. "Banks are waking up," said one investment-grade banker. "The entire credit spectrum is being examined and this will call into question the whole cheap credit issue. Companies have got away with murder, but the game is over," he stated.

The San Diego Padres Baseball Club Limited Partnership, owners of the Major League Baseball team, will likely come to market with a debt offering of up to $150 million, possibly within two months. The structure, which hasn't been finalized, would include a bridge loan that would be refinanced with a bond offering. Proceeds will go to finance the construction of its new stadium and to build some infrastructure surrounding it, said Fred Gerson, cfo. The company has already put in over $100 million in cash and equity, including land devoted to the new stadium, and needs to spend an additional $46 million to finish the project.

Tracy Collins (neé van Eck), senior managing director and head of collateralized debt obligation research for Bear Stearns, is switching to Bear Stearns Asset-Backed Securities Fund, an ABS hedge fund that she says is independent from Bear Stearns although Bear Stearns is a majority partner. Van Eck says she made the move to get a real two-days a week position and be a mother, as her hope to work part-time in her former CDO research slot turned out to be a five-days a week job. CDO research will be covered for now by Gyan Sinha, senior managing director, who is currently in charge of asset-backed securities research.