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Brian Hannon, a senior high-yield trader, has left Bear Stearns, according to another trader there. A senior high-yield trader at a rival firm says Hannon was laid off because, though he had been there for several years, he had been there for the shortest tenure among Bear Stearns' senior high-yield traders. He says Hannon traded cable, energy and some telecom credits. Hannon, who worked at Scotia Capital Markets prior to joining Bear Stearns, could not be reached. Art DeGaetano, head high-yield trader at Bear Stearns, declined comment.

Washington, D.C.-based MeriStar Hospitality, the owner of upscale hotels, is paying off its term loans "A" and "B" with a $250 million senior note offering to replace the bank debt with less restrictive longer-term debt. Bruce Riggins, director of finance said the company is making a move because, "bank debt is more restrictive in terms of covenants. The consequences of 9/11 made MeriStar out of compliance and at the mercy of the banks in terms of fees and going after collateral." He explained the goal was to reduce bank debt to 10-15% of total debt. "They [the bank group] are understanding, but had an opportunity to make money through non-compliance. The risk was of being at the banks' mercy," Riggins reiterated.

Mosaic Group extended the maturity of its credit facility to 2004 and reduced the commitments as the company anticipates a tougher market. "It just cleans and tidies things up in this environment," said Ben Kaak, executive v.p. and cfo. He explained that the company wanted to extend the maturity in light of what could be a tough market in the next couple of years. In exchange, Mosaic's deal was reduced to $300 million from $400 million and the pricing was increased to 215 basis points over LIBOR. Pricing had been 140 basis points over LIBOR.

NationsRent's debt was quoted in the mid-50s following an announcement early last week that the company had filed for Chapter 11 protection. The company announced last Monday that it had filed in an effort to restructure its debt. The company also obtained $55 million of debtor-in-possession financing led by FleetBoston Financial. Ezra Shashuoua, cfo, did not return calls for comment. Mark Baker, spokesman, confirmed that the company is restructuring its debt. "They have not filed a plan with the court. However, they're working closely with the banks on that and in due course will submit it to the court," he said.

Oaktree Capital Management, one of the most well-known high-yield and distressed debt money managers in the industry, is considering launching a $500 million to $2 billion add-on fund to its $2.5 billion distressed debt fund, according to BW sister publication Money Management Letter. The fund would consist of a mix of loan and bond assets from issuers that have tanked. Howard Marks, chairman of the Los Angeles-based firm, says it is considering the move because of the recent uptick in defaults and bankruptcy filings due to the weak economy. The first fund's closing was on Sept. 28 with $1.5 billion, and its second closing will be Dec. 20 with an additional $1 billion. About 20% of the existing assets in the fund come from foundations and endowments, says Marks. The minimum investment would be $3 million and the annual management fee would be 1%.

Oaktree Capital Management, one of the largest distressed debt money managers, will be shopping in the secondary loan market for distressed credits in the new year now that the firm completed raising a little over $2.1 billion for the final closing on its OCM Opportunity Fund IV. Howard Marks, chairman of the Los-Angeles-based firm, said it is looking for bargains in a volatile market. Marks declined to be specific about credits the fund is eyeing, including Enron and other well publicized distressed names. The increase in available distressed deals as a result of bankruptcy filings makes it a good time for the fund to invest, he said. A percentage of the fund will invest in high-yield bonds as well as loans, but Marks said it's impossible to determine percentages in advance. Future market conditions will determine the breakdown.

The condition of Captain D's bank loan is concerning rating agencies as a $135 million Bank of America led facility has not yet been refinanced and arrangements have not been made to extend the maturity of the credit, despite the fact the loan matures at the end of this month. Moody's Investors Service has put the senior unsecured bank loan rating on review for downgrade and Standard & Poor's has downgraded the corporate credit ratings on the expectation the loan should have been refinanced by now. S&P has the corporate credit rating hovering at CCC. Moody's has the loan at B2, recognizing the secured bank debt would achieve substantial recovery. Captain D's is a Nashville, Tenn.-based seafood restaurant chain.

U.S. Can's bank debt ticked down last week in a small trade to 81-82 from the 86 range. Size estimates were $5 million. The credit was in the 93 range prior to the company announcing it would be seeking an amendment. Dealers said the company's amendment was approved two weeks ago, but with limited fanfare. "I think lenders were expecting more money from the equity sponsor [Berkshire Partners]," a dealer noted. The Lombard, Ill.-based company makes steel and plastic in the U.S. and Europe. Calls to John Workman, cfo, were not returned. Diane Steel, spokeswoman, declined to comment.

While the par market nearly ground to a halt last week, dealers reported some further softening in the telecom sector. Nextel bank debt traded in the 90-91 range, down from a recent high of 93-94. "It's just following the bonds down," reported a dealer. Technicals were also faulted for the softer prices, as the dealer remarked there's no new information out on the company. Meanwhile, bids for Charter Communications' debt have come down half a point to 98 3/8, but the offer reportedly hasn't moved. Calls to Kent Kalkwarf, cfo of Charter, were referred to spokesman Dave Anderson, who did not return them. Calls to Paul Saleh, cfo of Nextel, were not returned. Further calls to Paul Blalock, head of investor relations, also were not returned.

Westar Financial Services, a prime auto lease securitization originator and servicer with $625 million worth of bonds outstanding, is looking for an acquirer. "We are talking to a few people [about] selling our portfolio, our origination and servicing platform, or the company itself," says Bob Christensen, president and ceo. Westar's portfolio represents 25,000 accounts totalling $625 million. No pricing has been set for the acquisition, he says. Christensen says his firm's difficulties started last month, when Bank One terminated its obligation to make further loans to Westar under a credit facility because Westar failed to complete a term asset-backed transaction in the given timeframe. Asked whether he was going to sue Bank One, Christensen would only say that, "Westar has sought counsel and will take the steps necessary to protect the value of its assets and of the enterprise itself." Other factors have contributed to delay the securitization attempt, he says, such as the effect of Sept. 11 on the capital markets and insurance industry. Christensen says Bank One's decision resulted in the end of Westar's origination business because the company is deprived of its source of funding. Thomas Kelly, a Bank One spokesman, declined comment, citing client confidentiality.

The large number of defaults this year by investment-grade companies has called attention to the relative limitations of investment-grade indentures, according to Sherri Andrews, head of high-yield research at BNP Paribas. Andrews says that when there are inherent problems with a credit, tighter indentures cannot protect bondholders from heavy losses on their investment. In certain cases, however, such as that of U.K. telecommunications equipment-maker Marconi, bondholders risk having their claims subordinated to the bank lenders as the bank debt matures and credit lines are renegotiated. While high-yield indentures typically contain protections that prevent banks from stepping ahead of bondholders in the capital structure, investment-grade issues, such as Marconi's, rarely do. Andrews argues that investment-grade bonds should contain protections such as negative pledges, which stipulate that if unsecured bank lenders demand security for a loan, bondholders receive similar security, allowing them to remain pari passu to holders of the bank debt.