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Lehman Brothers is launching a $1.225 billion bank deal for Tesoro Petroleum in New York on March 20, with a $750 million "B" tranche included in the package. "The funds are partly new money backing the acquisition of the Golden Eagle refinery from Valero Energy and also refinancing debt from the financing backing the BP refineries buy last fall," said one banker familiar with the transaction. The loan will include a $225 million revolver and a $250 million "A" term loan. Pricing on the pro rata is LIBOR plus 21/ 2% and LIBOR plus 3% on the "B". The "B" will retain the LIBOR floor instituted on the BP transaction, designed to assuage the fears of loan-participation funds suffering from the record low LIBOR rate (LMW, 10/14).

Morgan Stanley is reportedly talking about packaging commercial mortgage-backed securities backed by single asset and large loan deals, according to BW sister publication Real Estate Finance & Investment. Single asset deals--almost always backed by trophy assets--have been viewed as much riskier in the wake of Sept. 11. Jon Strain, managing director at Morgan Stanley, did not return phone calls seeking comment.

Orbital Sciences, a Dulles, Va.-based developer of space systems for commercial and military purposes, switched from J.P. Morgan to Wells Fargo subsidiary Foothill Capital, and Ableco Finance to lead its new three-year credit lines. Barron Beneski, responsible for investor relations at Orbital, said the new lines, composed of a $35 million receivables-based revolver and a $25 million term loan, will be used for short-term liquidity purposes. The previous J.P. Morgan-led credit was paid off last year when Orbital executed a turnaround strategy. Debt reduction was a component of the strategy, he noted. Beneski declined to give specific reasons for the switch.

The Royal Bank of Scotland is looking to add two credit analysts to its London-based European research team, according to a bank insider. The team currently has seven analysts and will add a utilities specialist and a strategist, he says. The additions are being made to meet the demand of new business coming from Europe. RBS recently began to expand its debt capital markets business outside the U.K. into France and Spain (BW, 1/6, 1/13).

Tenneco Automotive's bank debt began to crossover to the par side with roughly $2 million trading at 92 in the street last Thursday. The name has jumped from the 86-87 range where it had been trading two weeks ago following an amendment to the company's credit agreement. The modification provides for increased financial flexibility including the freedom to exchange subordinated notes for equity. The company is also permitted to conduct sale or lease back transactions of up to $200 million with proceeds going toward the prepayment of part of its bank debt. In exchange for the amendments, the company has agreed to pay an additional LIBOR spread of 25 basis points and reduce the size of its revolver by 10%.

Trading for Saftey-Kleen picked up last week with $30 million moving and bids climbing from 32-33 to 36 following U.S. Bankruptcy Court approval of the bidding and auction process for the sale of its Chemical Services Division (CSD). Dealers said all the major trading desks are looking to make trades. Earlier in the year the waste-services company had received commitments from Clean Harbors to buy CSD for $46.3 million and assume its environmental liabilities of roughly $265 million dollars.

Banc One Capital Markets has hired Bill Wulkan to the new position of European capital markets chief based in London. Banc One is beefing up its research group in an effort to build up its business in the U.S. and Europe. Dana Johnson, managing director and head of capital markets research, says the company has an established European bond origination business, but lacks someone to helm the effort. Wulkan will report to David Schabes, global origination director based in Chicago. Schabes could not be reached and Wulkan did not return calls. Wulken's last position was at Standard Chartered Bank in Singapore, though the nature of his duties there could not be determined.

Kelley Millet, senior managing director and head of investment-grade capital markets and syndicate at Bear Stearns, has added trading and research to his investment-grade managerial responsibilities, according to senior firm officials. Millet declined comment. Harry Rosenberg, the former research and trading head who left the firm last week, also oversaw high-yield trading and research. It could not be determined who, if anyone, has replaced him in that capacity.

Bank of America's $600 million add-on term loan "B" for Hughes Electronic has blown out, with more than $1 billion of commitments in on the deal since it launched two weeks ago. A banker familiar with the syndication said the nine-month commitment is to provide some working capital until the EchoStar Communications acquisition goes through. Drawdowns under this facility and a recently completed $1.25 billion loan will refinance debt at Hughes' Latin American subsidiaries and fund operations during 2002. Priced at LIBOR plus 3%, the commitment date closed last Thurday. Deutsche Bank and Credit Suisse First Boston provided a $5.5 billion bridge loan in November to EchoStar to buy Hughes from General Motors (LMW, 11/5).

Goldman Sachs and UBS Warburg today will dispense allocations on the $200 million "B" term loan for Rotech Healthcare, with investors expecting slim pickings from the much sought after deal which blew out just days after launch. A banker said buyside accounts snapped up paper for the Integrated Health Services subsidiary, but overdemand will limit the amount allocated to each fund. Rotech, which markets respiratory products and durable medical equipment, is being spun out of bankrupt IHS, which is currently reorganizing.

Fallen-angel Calpine is returning to the bank market in late March with its reworked and now secured $1.6 billion bank deal. The loan facilities, which comprise a $600 million institutional tranche and a $1 billion revolver, will be syndicated in late March, said a banker. Credit Suisse First Boston, Salomon Smith Barney and Deutsche Bank are the lead arrangers on the "B" tranche, while the lead arrangers on the revolver are Bank of Nova Scotia, Bayerische Landesbank, Bank of America, CSFB and TD Securities. Katherine Potter, Calpine Spokeswoman did not return calls.

Computer Associates has traded in the 95 range down from 98 1/2 earlier this year with $5-10 million changing hands last week following reports of a convertible notes offering. Rumors suggest the name may have dipped lower as it passed from dealers to institutions, according to traders. Market players have split views on the strength of the name. One dealer suggested that the convertible issue is seen as an "act of desperation" in the eyes of investors, who are concerned with the company's overall health. Another trader defended the name believing it was a sound investment. Last Thursday, CA announced it would issue $600 million in convertible senior notes due 2007.