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Wayne Schmidt, portfolio manager with Advantus Capital Management, is going to swap $70 million, or 7% of the firm's portfolio, out of Treasuries into corporates, on the view that corporate spreads will tighten as the economy rebounds. He says there is no particular trigger for such a move, and selection will be made on a credit-by-credit basis. However, he notes that the recent strength in the equity market is an indicator of a potential rebound.

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.

Swiss Re Investors, the New York investment arm of the giant Swiss insurer, is looking to add 2-3%, or $640-960 million, in crossover credits to its portfolio on the view that the economy will come back strong this year and productivity and consumer earnings will pick up. Andre Moutenot, the chief portfolio manager who oversees the firm's $32 billion in taxable fixed-income, says management restrictions prevent him from moving further down the credit ladder into true junk territory, or he would do so to pick up additional yield. He says the firm was making the trade last week, and he would not specify names of companies at which the firm is looking.

Fidelity Investments has unveiled a corporate bond fund that will invest in sterling-denominated issuance, which it will market to small- and medium-sized pension funds, says a firm spokeswoman. With FRS17 set to go into effect next year, there will be more demand for longer-dated corporate paper. The fund, launched last week in London, will be managed by Alex Veys, who also manages another sterling bond fund. In addition to sterling-denominated corporate bonds, the fund will invest in supranational and agencies, and will focus on paper with maturities of 10 years or more and rated triple-B and above. Fidelity manages about £1 billion in U.K. corporate bonds.

The adoption of FRS 17, a new accounting treatment of pension fund liabilities, is making U.K. bond managers move quickly to seize opportunities from a potential spike in longer-dated corporate bond issuance. The new rule forces companies to more accurately balance their pension assets and liabilities. London-based senior reporter Rachel Wolcott presents several examples of what some larger players are saying and doing about this shift.

The New York-based branch of Norddeutsche Landesbank (NORD/LB) is seeking an assistant v.p. to work on origination for transactions related to Hannover Funding, the NORD/LB sponsored asset-backed commercial paper conduit.Omar Bolli, senior v.p. and head of asset-backed finance, says the hire would round out the group, which now consists of three securitization professionals. The new hire will report to Bolli. The group includes Bolli, the senior v.p. who heads the group, v.p. Edward Weber and analyst John McDermott. Bolli says that after that, the group has no further hiring plans for this year.

Sharad Chaudhary has been appointed Banc of America Securities' new head of asset-backed securities research. The move comes one year after the position was vacated by the resignation of Meredith Hill (BW, 3/5/01). In addition to his ABS duties, Chaudhary has also been overseeing B of A's residential and commercial mortgage-backed research, says Pat Augustine, the group head of MBS and ABS sales, trading and research and to whom Chaudhary reports. During the past year, ABS research had been handled by Tim Patrick, a managing director and head of high-grade research and credit strategy.

Banc of America Securities last week launched syndication of a $390 million leveraged recapitalization for American Seafoods Group with a bank meeting in Seattle for existing lenders. A meeting will be held March 21 for institutional accounts and select new investors. American Seafoods is a harvester and at-sea processor of groundfish.

The $650 million term loan "B" on Goldman Sachs' and Citibank's $1.2 billion credit for SC Johnson Wax has been fully subscribed after launching two weeks ago in New York and London. The "B" contains a $100 million euro tranche that, depending on the level of European demand, could be upsized to $200 million, said a banker. The pro rata $550 million has snared a handful of banks, and is said to be progressing smoothly.

Forest City Enterprises, a Cleveland-based real estate company, has expanded its credit facility by $100 million and added three new banks to its group. The maturity date on the $350 million facility, led by Key Bank and National City Bank, has been extended from 2003 to 2006, said Thomas Kmiecik, assistant treasurer. Explaining the timing of the increase, Kmiecik said Forest City has several projects under construction. He added that the move for the increase led the company to also extend the maturity. "When you go in with that type of change, you look at the maturity also," he said.

Congress Financial is said to be close to joining Bank of America's $200 million, three-year asset-based refinancing for Hyundai Motor America, the U.S. distributor of Hyundai automobiles and auto parts. GE Capital, CIT Group and Foothill Capital have already committed to the best-efforts credit, according to a banker familiar with the deal's syndication. The credit is secured by accounts receivable and inventory. Pricing is LIBOR plus 2% and is tied to a utilization-based grid, and there is an unused fee of 1/4% at closing. The credit refinances an $85 million secured revolver. Sales in 2001 reportedly were approximately $4 billion. Calls to officials at Congress Financial were not returned.

The new pension accounting rule FRS 17, set to become mandatory next year, could curtail some U.K. companies' ability to fund themselves in the debt capital markets, say analysts. The new rule, which requires companies to account for their pension fund liabilities on balance sheet, could make companies appear over leveraged--especially those with pension liabilities larger than the market value of the company. Companies with large pension liabilities need to show investors that they have a feasible plan to fund them, otherwise it could impact their cost of capital, warned one analyst. Many of these deficits look awful until the company explains how they will be funded, says Crispin Southgate, fixed-income strategist at Merrill Lynch in London. "Investor relations strategies are key," he says. But some companies may be in for trouble, if they do not have a game plan. "It will impact their cost of capital, especially if the deficits are big and horrible, and justifiably so," he says.