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Fixed-income energy analysts on the buy- and sell-sides are concerned that continued warm weather this winter could result in an excessive supply of natural gas, driving down bond prices of issuers that are not adequately hedged in the futures market. Because a number of companies that store gas are required to withdraw excess supply at the end of the heating season, the market may see a sudden flood. "Natural gas storage levels are extremely high, and if they remain high into the spring, it could be negative for prices," says Ted Izatt of Lehman Brothers, the top-ranked investment-grade energy analyst on the 2001 Institutional Investor All-America Fixed-Income Team. Izatt says Burlington Resources and Devon Energy are two of the most vulnerable companies. Burlington Resources 6.5% notes of '11 were bid at 180 basis points over Treasuries last Tuesday, while the Devon 6 7/8% of '11 paper was bid at 225 basis points over the curve.

Nicholas Bravard, Goldman Sachs' London-based head of European high-yield trading, has left the firm. Bravard was long-rumored to be one of the London junk market's more highly compensated traders. "He's known to be the biggest guy in the market," says a head of high-yield trading at a rival sell-sider. When told that Bravard had left Goldman, the trader quipped: "Now it makes sense why we're doing so much more business lately." Bravard's next destination could not be determined and he could not be reached for comment. Rebecca Nelson, a Goldman spokeswoman, said she did not know the reason for Bravard's departure, and that his replacement has not been named. London-based European high-yield traders say their Goldman counterparts told them Bravard had retired. This was met with some skepticism: "That's ridiculous. He's only 36," says one.

Merrill Lynch has laid off Phil Gorrubbo, a director of investment-grade fixed-income sales in its Atlanta office. Gorrubbo had been at Merrill for nearly a decade, according to firm insiders, who believe he is the only investment-grade salesman laid off by Merrill in the recent round of cuts. One investment-grade salesman at another firm says that since the asset class had a record year last year, it has typically seen fewer layoffs than in other areas such as high-yield that turned in a relatively weak performance.

Morgan Stanley and Lehman Brothers are developing a host of corporate bond baskets to build on what they say is considerable investor interest in this rapidly expanding new market. Morgan Stanley plans to unveil one or two more versions of its 10-year basket, called TRACERS, in five- and/or 30-year maturities in the next two weeks, and may eventually launch sector-specific products as well, says Tom Thees, the firm's New York head of investment-grade trading. Lehman just last week launched TRAINS in five- and 10-year baskets, and will be introducing similar products over the coming months in response to requests from investors, according to Rick Rieder, co-head of global credit trading at Lehman. Rieder declined to be more specific.

Morgan Stanley is looking to expand its already formidable presence in the European fixed-income business and to that end wants to hire origination bankers, salespeople and traders for its London office. Jonathan Chenevix-Trench, head of European fixed income, says the firm is still very positive on the European market and wants to develop its presence. The firm is looking for originators for asset-backed securities, corporate and government bonds and is looking for salespeople and traders across the board. Chenevix-Trench did not say by how much Morgan Stanley would increase its fixed-income headcount.

The Royal Bank of Scotland is planning to hire at least six bankers for its asset-backed origination business in the U.K., according to an industry official familiar with the firms' plans. This market veteran says that the new hires will be directed at bolstering the firm's existing group, as part of its overall plans to increase its presence in the U.K. debt capital markets business. Calls to Euan Hamilton, co-head of securitization in London, were not returned. RBS was ranked 10th in Thomson Financial's all non-dollar international asset-backed bookrunners league table for 2001.

SG, the corporate and investment banking arm of Société Générale, is looking to bulk up its asset-backed banking team in London. Richard Hopkin, the newly hired deputy head of the securitization team, says a few new hires will be necessary to handle the firm's heavy deal pipeline, declining to say how many it has lined up. There are 10 people currently in the London ABS group. Prior to joining SG, Hopkin was a managing director at Deutsche Bank in London, where he was responsible for commercial paper conduits, asset-backed commercial paper conduits and developing the firm's consumer term ABS business. Hopkin, who joined earlier in January and is responsible for Northern European and U.K. business, reports to Jean-François Despoux, Paris-based head of securitization.

Though investment banks and investors are increasingly turning a deaf ear to smaller high-yield issuers, there is convincing evidence that they are missing an opportunity, according to Sherri Andrews, head of high-yield research at BNP Paribas. Andrews points to statistics from Credit Suisse First Boston demonstrating that small issues significantly outperformed deals larger than $300 million last year. While deals larger than $300 million returned only 1.04%, issues between $101-$299 million returned 11.37%, according to this report. Deals $100 million and smaller did the best of all, returning 13.44% last year. Andrews says the average deals in 1997 and 1998 were much smaller. "As mutual funds got larger, it became increasingly difficult to sell them these small transactions. One of the themes last year was that smaller issuers basically couldn't tap the market," she adds.

Banc of America Securities has moved a couple of trading positions internally, according to Pat Beranek, a consumer asset-backed securities trader. Beranek used to work in the high-grade syndicate desk and has been internally moved to the asset-backed securities syndicate desk, where he will report to Christopher Hentemann, head of ABS syndicate. Beranek used to report to Jeff Kane, managing director and head of global high-grade syndicate. Kane says Beranek's move merely reflects a restructuring change as Beranek's product used to be covered in the high-grade syndicate area and has now been transferred onto the ABS desk. Beranek will focus on primary issuance for consumer ABS origination, including credit-card and automotive-backed securities.

AIG Global Investment Group is looking to hire a senior investment manager for its fixed-income business in London. It is unclear whether the new hire will replace David Furey, the former head of fixed-income in London, who recently left. Furey's next destination is not known, and firm officials declined to comment. AIG is looking for a candidate to manage is

Total investment grade issuance clocked in at $7 billion for the week ended Thursday, bringing the January total up to $32 billion. The month is on target still to hit $40-50 billion in investment grade borrowing, although subsequent months are expected to drop into the $30 billion range as corporate America has less need to borrow this year. The primary market has lost its luster in line with the increased equity market volatility, dismal 4Q earnings, the widening of swap spreads and the rating agencies' downgrade rampage. After a record number of fallen angels in 2001, the agencies seem prepared to downgrade first and ask questions later. There were only 3, $1 billion plus deals last week as benchmark borrowers shied away from interest rate volatility.