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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.

Crédit Agricole Indosuez (CAI) is looking to add two bankers to its London securitization team that covers Northern Europe. Peter Kappel, head of Northern European ABS, says the firm will hire one origination banker and one structurer. CAI only recently established a London-based ABS effort (BW, 2/4) and is now putting together its first deals, says Kappel. He plans to use CAI's balance sheet fairly aggressively to provide acquisition finance loans, which eventually will be replaced with securitization financing. In the future, CAI's London group will concentrate on heavily structured types of transactions, such as whole business deals, fixed capital and commercial mortgage-backed deals.

Enbridge Energy Partners, L.P., a master limited partnership (MLP), has obtained an increased $600 million, three-year revolver that offers both the MLP and its crude oil pipeline entity, Enbridge Energy, L.P., access to the funds. Under the structure of the company's old $350 million, five-year revolver, assets of the oil pipeline entity, an operating limited partnership (OLP), secured the deal and usage was restricted to the OLP itself. In comparison, the $600 million revolver is unsecured and can be tapped by both the MLP and the OLP for growth and working capital needs. For this reason the company found it advantageous to consolidate its financing at the MLP level, said Scott Wilson, v.p. of finance for Enbridge, Inc., parent company of the MLP.

High-yield energy analysts say recent widening in the bonds of Vintage Petroleum, largely due to the perception of heightened risk associated with its Argentine assets, has made it one of the more attractive plays in the energy sector. One sell-side analyst says he is considering upgrading his recommendation on the bonds to buy from hold, as he has watched them widen some 300 basis points over the last two months. The Vintage 7.875% notes of '11 (B1/BB-) were trading at close to a 10% yield at 480 basis points off the curve last Tuesday. He says that because the company has a strong management team with a good track record, he believes Moody's Investors Service will give it some breathing room before lowering ratings further. Moody's downgraded the company late last month with a negative outlook. He sees 75 basis points worth of short-term tightening in the name, and says it will trade at close to an 8% yield longer term once it resolves difficulties surrounding the integration of its recent purchase of Genesis Exploration.