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Moody's Investor Service realeased data last week reviewing statistics regarding downgrades on the different asset classes of collateralized debt obligations with CLOs suffering far less downgrades than their CBO counterparts. Arbitrage cash flow CBOs and synthetic balance sheet CDOs were the hardest hit of all structures, according to the Moody's report while balance sheet CLOs were among the top performers.

Lead arranger and administration agent Credit Suisse First Boston is offering 1/4% commitment fees for the five-year $400 million refinancing for King Pharmaceutical. The deal also carries an out-of-the-box spread of LIBOR plus 1%. Bank of America, J.P. Morgan and UBS Warburg are co-syndication agents for the BB+/Baa3 credit, launched with a bank meeting two weeks ago. The deal is one of a number of credits in the market in the pharmaceutical sector. King is a specialty pharmaceutical company that buys products divested from the mergers of mega-pharmaceutical companies.

Deutsche Bank has flexed pricing 1/2% on the $275 million, six-year term loan "B" for AMF Bowling Worldwide, after feeling the bite of a selective investor crowd. The "B" is now priced at LIBOR plus 41/ 2%. The $75 million revolver is unchanged at LIBOR plus 31/ 2%, said a banker. The credit is an exit financing for AMF, which is emerging with far lower debt levels than when it filed for Chapter 11. Approximately $1.2 billion of debt is being replaced with $450 million of funded debt, including $300 million of the bank debt and $150 million of notes due 2008. The bank debt has a B1 rating from Moody's Investors Service.

Goldman Sachs and UBS Warburg will launch Tuesday a $275 million bank deal for RoTech Medical, a subsidiary of Integrated Health Services that markets respiratory products and durable medical equipment. IHS is currently in bankruptcy, but RoTech is being spun out as part of the reorganization, said a banker. Split between a $200 million "B" term loan and a $75 million revolver, the credit already has gathered considerable interest, he added. Leverage is 1.1 times senior and 2.8 times total, with the credit expected to be rated BB-/Ba2, the banker stated. The deal is priced at LIBOR plus 3% on the revolver and LIBOR plus 31/ 2% on the "B" term loan.

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.