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European fund managers say they are not interested in buying asset-backed bonds because single-A and triple-B rated corporate paper offers more upside. "If you're bullish on credit, it makes sense to buy lower-rated corporate paper which has more juice," says Davide Cataldo, Milan-based head of credit at Pioneer Investments. Even though ABS paper has become more liquid, Cataldo says he would rather buy riskier, more liquid corporate paper that allows for better trading flexibility. Lately, analysts have been warning investors to take a good look at ABS deals to see if companies are over-leveraging themselves, but investors are not interested in triple-A securitized paper.

Highlighting buyside hunger for health care credits, Credit Suisse First Boston and Citibank's $350 million acquisition credit for St. Louis-based Express Scripts, backing the company's acquisition of New Jersey-based National Prescription Administrators has already blown out, and the bank meeting has not yet even been held. "It's a highly rated BB credit, leverage is low, and the bonds are trading tighter than many investment grade names," said one banker. The official launch is this week, and pricing talk is LIBOR plus 21/ 4% or better, said a banker, but the credit is already full. "Investors rang up and said, 'I want $50 million,'" said one banker, commenting on the popularity of the credit. Express and NPA are pharmacy benefit management companies.

Fitch Ratings is looking to add a handful of analysts to its London office to bulk up its European structured finance group and to keep up with the amount of new business, says a firm official. Specifically, Fitch is looking for two commercial property analysts, a whole business securitization analyst and a surveillance analyst to keep tabs on commercial mortgage-backed transactions. Moody's Investors Service is also beefing up its structured finance team and aims to have over 100 analysts covering European structured finance by year-end (BW, 2/11).

Goldman Sachs has made several changes to the uppermost levels of its credit business. David Solomon, managing director and head of the firm's fixed-income credit business, will run equity capital markets, according to a Bloomberg message a high-yield salesperson at Goldman sent out to several clients on the buy-side. Currently, the co-heads of global equity capital markets are Mike Evans and Mark Tercek. Ed Forst, managing director and chief of staff, global fixed-income, currency and commodities division, has been promoted, along with Don Mullen, managing director and former head of leveraged finance, to co-heads of the credit business replacing Solomon. Mullen's position will not be filled, according to senior Goldman officials, and it could not be determined whom, if anyone, will replace Forst.

The new $450 million Graphic Packaging International deal, launched into the market earlier this month by Credit Suisse First Boston and Morgan Stanley, backs a company that is strong in its market but has an aggressive financial position, according to Standard & Poor's. S&P has slapped a BB rating on the credit, which refinances an existing $325 million deal. The facility is secured by substantially all of the company's assets, which should provide a material advantage to lenders, according to Pamela Rice, S&P analyst. But S&P's simulated default scenario shows that it is not clear whether the distressed enterprise value of the company would be sufficient to cover the entire loan. S&P views the company, which produces folding carton packaging for consumer goods concerns, as less vulnerable to cycles than other packaging companies. "There is fairly stable demand," Rice said. "They're not as cyclical as other paper companies." Rice explained that the company is rated on the attractiveness of its markets and its position in that market, its diversity of products, customers and geography, and also its cost position relative to competitors.

Hedge fund, D.E. Shaw, hired Max Holmes and Daniel Posner last week as part of an effort to expand its business to include distressed trading. Holmes and Posner will act as senior vice presidents to develop and implement investment strategies focusing on the distressed market. Holmes joins the firm after serving as founder and co-head of the high-yield group at RBC Dominion Securities. Posner joins from Intermarket Corporation, where he was a portfolio manager specializing in distressed securities. Posner and Holmes were unavailable for comment and calls were referred to a spokesman, who declined to comment further on their responsibilities.

Kmart's $2 billion DIP facility launched on Valentine's Day raised $500 million by the end of last week with bankers saying the market is reacting with enthusiasm. The deal is priced at LIBOR plus 31/ 2% across the board with a 3/4 % commitment fee on the $1.8 billion revolver. There is also a $200 million letter of credit facility for the bankrupt retailer, which has set out ambitious plans for a quick re-emergence in 2003, according to a banker. The tenor on the DIP is 27 months, in which time, Kmart plans to invest in new technology, close unprofitable stores, and terminate the leases of about 350 stores.

Ron Consiglio, wireline telecom analyst at Lehman Brothers, has resigned to move to Loeb Partners, a hedge fund, according to Mike Guarnieri, head of research at Lehman. Ryan Langdon, his counterpart at ABN AMRO, was let go amid rumors of a larger reorganization there, says an official at the firm. Mark Rose, a second-teamer on the 2001 Institutional Investor All-America Fixed-Income Team at Goldman Sachs, is looking to move internally, according to analysts close to him. The job changes among sell-side high-yield wireline telecom analysts come as underwriting activity has come to a halt and secondary issues are trading at distressed levels. Langdon and Consiglio could not be reached, though Langdon, in a recent interview with BW, had questioned his future at ABN AMRO. Rose declined comment. Langdon reported to Ray Stottlemeyer, London-based global head of high-yield research. He could not be reached at press time.

U.S. Liquids, a liquid waste management company based in Houston, is looking to refinance a $100 million revolver led by Bank of America and Fleet Bank this summer. The existing line was set to mature this month, but has been extended to June 2, after an extension was provided to allow for an audit to be completed, said a source familiar with the situation. The same banks are likely to lead, he added. Earl Blackwell, cfo of U.S. Liquids, confirmed the refinancing, but declined further comment, including potential pricing or exact timing of the launch. Pricing on the existing line, reduced from $111 million at the time of the extension, is LIBOR plus 33/ 4%, according to Capital DATA Loanware.

Merrill Lynch last week priced notes backing its $350 million collateralized loan obligation, Longhorn CDO II, which will continue to ramp up a small percentage of assets. Merrill Lynch Asset Management is manager on the deal and, according to a banker familiar with the situation, it is the underwriter as well. There is an outside third-party equity investor that could not be determined by press time. The deal is structured as a cash-flow arbitrage transaction with investment-grade bank loans and high-yield debt as collateral. Percentages of the two asset classes could not be determined. Calls to officials at Merrill Lynch were not returned by press time.

Nextel Communications traded down from 86 1/4 to 84 1/2 last week amid mixed market feelings. Buyers and sellers could not be determined. Falling from the 89-90 range earlier this month, the liquid name has begun to crossover to the distressed side. Some traders defend Nextel, speculating that dealers have been unloading the paper to purposely push the price down. But others point to equity and bond prices, which have also experienced dips.

Moody's Investors Service has placed the ratings of Trumbull, Conn.-based Oxford Health Plans under review for possible upgrade based on a continuation of favorable financial performance and upstream dividend capabilities, primarily from the New York subsidiaries. The senior secured bank facilities are rated Ba3. Moody's also notes a growth in membership exceeding earlier expectations. Oxford Health is a managed care company providing health benefits programs to approximately 1.5 million members in the New York metropolitan market. The company's debt levels are low and dividend capabilities relatively favorable to the debt, according to Moody's. The rating agencies will consider the company's strategy for both membership and shareholder growth, including possible acquisition activity. Calls to spokeswoman Maria Gordon Shydlo were not returned.