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Loews Cineplex Entertainment's second lien loan is getting extra attention from investors with small pieces trading in the 97-97 1/4 range as market buzz suggests the company might look for new financing. "A lot of people think that there might be an IPO or bond deal," one trader said. The name is trading off of pure rumors that the company is going to do a bond deal to make a more complete capital structure, said another. Conversely, one banker denied the rumor, stating, "They can't get cheaper financing." Angelo Gordon and Bank of New York are two investors believed to hold positions in the name. The name last traded in the 95-96 range three weeks ago.

Pacific Gas & Electric has been sparking the market with at least $10 million changing hands last week in the 107-108 range after California Public Utilities Commission proposed an alternative reorganization plan last Monday. Dealers explained the plans proposed by the company and by the state regulators both offer bank investors 100% return on principle plus 8% interest. "People think it's a bulletproof piece of paper," one trader said. The name is reported to have been active in the secondary market over the last month.

Fitch Ratings has downgraded the MINCS-PILGRIM 1 synthetic collateralized loan obligation in response to pressure on the loans within the deal's underlying reference portfolio. Jim Barry, analyst at Fitch, said the rating downgrade reflects defaults totaling over $41 million.

High-yield portfolio managers have conflicting views on whether the recent resurgence of smaller high-yield issues in the primary market is a good thing. Michael Collins, high-yield portfolio manager at Prudential Financial, worries that small deals are illiquid, and require more time from the firm's own analysts to understand than they bring in returns. He points to the recent $150 million 9.75% notes of '12 by Alltrista, a home canning equipment company, as an example of a deal that can be a drain on analytical resources: "You don't follow the sale of home canning equipment as part of your regular job." Collins says he cannot rule out small deals, but feels more comfortable investing in fallen angels, particularly Tyco International and Qwest Communications, because they are well-covered and have stable underlying cash flows. He says Prudential has been "in and out" of these names, but would not give details.

UBS Warburg and Morgan Stanley's $375 million "B" loan for RailAmerica blew out last Wednesday, the day it hit the market, as the company tapped the market during a sweet spot for issuers. "The market is on fire right now," said one banker. RailAmerica knew this was the case and came to market specifically with the purpose of cutting pricing, he added. The "B" used to be LIBOR plus 31/ 4%, but is now LIBOR plus 23/ 4%, he commented. The six-year $100 million revolver, priced at LIBOR plus 21/ 4% and is still chugging along, he said. The names of the banks interested in the revolver could not be ascertained.

WESCO International's recently refinanced revolver offers the company greater operational flexibility in its covenants and new long-term financing. The company was able to negotiate more flexible covenants because the new $290 million, five-year revolver is asset-based. "We were looking for longer maturity, increased liquidity, and we wanted to be able to take advantage of the assets that we have, said Dan Brailer, treasurer and secretary for WESCO, adding, "We could do that at essentially the same price. It made a lot of sense." Brailer would not disclose the exact pricing, but said it is comparable to the old.

XO Communications' bank debt shot up 10 points to the 68-70 range last week after its bank group agreed not to press default measures agreed upon in a December 2001 forbearance agreement. Dealers said only small pieces of the paper traded up from the 58-60 range where it had been quoted since the end of March. The forbearance agreement gave the company breathing room until April 15. After that date, lenders could have demanded immediate repayment of the debt and attempted to seize the company's assets. The company is still working with its creditors towards an acceptable balance sheet recapitalization.

The investment grade calendar trickled to just $4.5 billion for the week as the market was still very heavy from the active calendar in March and early April. The pattern of issuance has showed all the signs of late-cycle borrowing, with Yankees (South Africa for $1 billion, Chile for $600 million) accessing the market and the average deal size for the week dropping to just under $350 million, the lowest level since the market turmoil of early February. As is typical of this stage in the borrowing cycle, the high yield calendar has also now heated up, with about 11 junk deals priced for a total new issue volume of $2.5 billion. The weighted average rating for all borrowings for the week was BBB flat, the lowest reading since the onslaught of junk issuance in late 2001.

The investment grade calendar trickled to just $4.5 billion for the week as the market was still very heavy from the active calendar in March and early April. The pattern of issuance has showed all the signs of late-cycle borrowing, with Yankees (South Africa for $1 billion, Chile for $600 million) accessing the market and the average deal size for the week dropping to just under $350 million, the lowest level since the market turmoil of early February. As is typical of this stage in the borrowing cycle, the high yield calendar has also now heated up, with about 11 junk deals priced for a total new issue volume of $2.5 billion. The weighted average rating for all borrowings for the week was BBB flat, the lowest reading since the onslaught of junk issuance in late 2001.

Citic Ka Wah Bank asked Standard & Poor's (S&P) to withdraw its BBB senior debt and BBB- subordinated bond ratings this week, despite its plans to launch a $250m upper tier two perpetual debt issue. The move came as a surprise to the market, as the bank had been expected to launch the deal imminently. HSBC, ICBC and UBS Warburg are the three joint lead managers for the transaction.

CLP Power is looking to end an absence of Hong Kong credits from the international bond markets with the launch of a roadshow for a planned $300m 10 year Reg S transaction next week. The new issue will be the privately owned corporate's first international bond in six years. Given a dearth of recent issuance from Hong Kong and with regional investors clamouring for more deals, the timing of CLP Power's return to the market looks ideal.

China China's GDP grew 7.6% in the first quarter of this year as a result of improved investments and exports. This compares with growth of 6.6% in the first quarter of 2001.