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Glasgow, Scotland-based Abbey National Asset Management, which manages roughly £4.5 billion in fixed-income assets, is shortening duration in gilts in an attempt to protect itself from potential weakness in the market on the back of improved economic growth. Rod Jack, the firm's fixed-income investment manager who focuses on the U.K. government market, says the next purchase will likely be the U.K. 5% bonds of '12, which are being auctioned this week and should bring interest into the market, because investors want to increase their liquidity. The firm has recently upped its allocation to cash from 2-3% to 5-6% on the view that yields will continue to fall.

The Allstate Corporation is looking to add $20-25 million in bonds of distressed investment-grade telecoms, such as Qwest Capital Funding,Sprint Corp., or WorldCom. Mark Cloghessy, portfolio manager overseeing the firm's $13 billion investment-grade bond portfolio, says he believes investor concerns that these companies will not be able to maintain access to funding are exaggerated, and that spreads will narrow. He would like to add the Qwest Capital Funding 7.25% notes of '11 (Baa3/BBB), which were trading at 490 basis points over 10-year Treasuries on March 22. The issue was trading 130 basis points wide of the Qwest Corp. 8.875% notes of '12 (Baa2/BBB) on March 22. Cloghessy says that while Qwest Corp. produces more cash flow, he does not believe it justifies the spread differential, noting that Standard & Poor's gives the Qwest Capital Funding issue the same rating. Cloghessy would rather add Qwest than Sprint or WorldCom because he does not own any Qwest paper. However, he is concerned about the Securities and Exchange Commission inquiry into the company. Before investing, he would like some assurance that the company will go ahead with a planned convertible bond issue to provide much-needed liquidity.

A time of the signs ... Loan Market Week has been remiss in not updating the story of the riveting saga it first reported on back in December: the state of the large sidewalk sign in front of J.P. Morgan Chase's Park Avenue headquarters. When we last reported on the condition of the imposing nameplate, the banking behemoth had covered it with a blue vinyl slab with the name and logo smartly embossed in white letters. The new covering went over the metal panels sporting the JPMorganChase name which went over the granite/marble sign sporting the Chase Manhattan name. The metal panels were looking a little rough, with some details in the letters knocked out and some minor discoloring on the borders. But in an incredible plot twist, it turns out the blue sign was just a temporary measure until a brand spanking new metal sign was set to be mounted, in all its glory. Stay tuned.

This chart, provided by Citibank/Salomon Smith Barney Inc., tracks bid-ask prices for par credit facilities that trade in the secondary market. It also tracks facility amounts, ratings, pricing and maturities.

Reto Koller, portfolio manager with Winterthur Investment Management, will switch from a neutral Treasuries exposure to a barbell strategy in a couple of weeks by moving out of five- to 10-year Treasury allocation and buying into three-month and 30-year Treasuries. The move would involve 10% of the portfolio or $200 million. A barbell strategy increases protection against price depreciation along the intermediate part of the yield curve. Koller reasons that by mid-April, the Treasury curve will flatten ahead of the first Federal Reserve tightening which he anticipates will be in May following signs the economy is growing. He says that the market's anticipation of the Fed move will lead to a flatter yield curve as early as mid-April. Koller says a trigger for his barbell strategy will be when the yield differential between the long bond and the two-year Treasury decreases to 200 basis points. Last Monday, this yield differential was 211 basis points.

Bank of America's $225 million "B" term loan for American Seafoods Group is over two times oversubscribed, while B of A and Credit Suisse First Boston's $800 million DaVita "B" has $1 billion in commitments. A banker said the Seafoods recapitalization is almost complete, with 80% on the pro rata also filled. A meeting was held on March 21 for institutional accounts. The credit consists of a $75 million five-and-a-half-year revolver priced at LIBOR plus 3%, with a 1/2% commitment fee. The $90 million term loan "A" has the same tenor and spread and the "B" is priced at LIBOR plus 31/ 2%. "The original transaction was put in place in January 2000, when Centre Partners Management, members of management and two native Alaskan equity investors purchased the company," explained Scott Perekslis, managing director at Centre Partners (LMW, 3/11).

Aquila Power Services, a newly formed holding company of private-equity firm First Reserve, tapped Deutsche Bank for a $100 million senior secured debt package backing the acquisition of Welding Services and is currently eyeing further acquisitions. "Aquila was founded by First Reserve to capitalize on the growth for services and equipment in the power industries," explained James Bennett, a v.p. at Aquila. "The firm [Aquila] does not have a specific fund devoted to acquisitions, but First Reserve does have over $2.5 billion under management," he added. The acquisition is the second after the acquisition of C&W Fabricators for $60 million, Bennett said, but he declined to name potential targets or a timeframe. Welding Services is a specialty mechanical maintenance contractor.

Flowserve has tapped Bank of America and Credit Suisse First Boston to lead an upcoming acquisition financing deal after landing the Flow Control Division of Invensys for $535 million last week. "Flowserve was involved in an auction for the division last August, but pulled out after Invensys would not accept the bid," noted spokesman Sean Clancey. "We were very firm on valuations. In December Tyco International pulled back from their proposed bid and our chairman [Scott Greer] got a call to re-enter negotiations in late January," he added. Clancey declined to say how much debt would be involved in the acquisition, but said the company will have no higher overall leverage after closing than the current level, as measured by debt to EBITDA. Equity as well as debt will be used to finance the deal which is expected to close within two months, he noted.

Four Corners Capital Management, a new shop run by some familiar names, has entered the market with its debut collateralized loan obligation since the fund's inception in September 2001. Market sources said the firm is ramping up a roughly $400 million deal that will be a cash flow arbitrage structure with leveraged loans as the majority of the collateral on the deal. Michael McAdams, who left ING Capital Advisors to head up the new fund, was unavailable for comment as he was said to be shopping the deal in New York.

Three members of an eight-person team overseeing the $1.8 billion high-yield portfolio of Seneca Capital Management, a San Francisco-based money manager with $14.9 billion in total assets, have resigned. High-yield officials close to the three say they were upset because they felt Gail Seneca, the firm's ceo and cio, was meddling in their investment decisions, causing their performance numbers to slide. Seneca's high-yield team has beaten its benchmark, the Lehman Brothers high-yield index, in every year since 1997, according to gross performance figures posted on the firm's Web site. However, the team underperformed its benchmark in the fourth quarter of last year. First quarter performance figures were not available, and Gail Seneca declined to provide them. Seneca would not comment on why the trio chose to leave, and says she has "no way of calibrating" how much she is involved with the high-yield group.