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J.P. Morgan and Citibank/ Salomon Smith Barney are doing early work on a new expanded commercial paper backstop for Hewlett-Packard Company, likely to emerge in the first quarter next year. Ken Frier, assistant treasurer for Hewlett-Packard, said, "We are raising a new backstop with Salomon and J.P. Morgan to replace the old five-year Salomon-led facility, maturing in April 2002." The old facility was $1 billion, he noted, but the new one will be larger for two reasons. "When we merge with Compaq, theirs will terminate," he said. "The new one will need to encompass the needs of both companies," he said. Furthermore, the backstop needs to support an expanded commercial paper program, regardless of the merger, he added. "Hewlett has been in a position with a $1 billion CP to support a larger backup program," Frier noted. He was unable to provide a figure for the planned backstop.

Jim Salonia, former senior v.p. with Phoenix Investment Counsel, has switched to ING Aeltus Group to head up its marketing, business management, sales support and client service for institutional sales. He will again be a senior v.p. Salonia now reports to Duke Meythaler, head of the distribution platform at ING Aeltus capital management. He used to report to Tom Meyers, senior v.p. and head of institutional sales, at Phoenix Investment Partners in Indianapolis. Phoenix Investment Counsel is a fully owned subsidiary of Phoenix Investment Partners. Salonia says he replaces Arnold West at ING Aeltus, and that West remains with ING as a v.p. in institutional sales.

Buy-side analysts and portfolio managers say there are a number of bargains in the energy and utilities sectors, as panic sellers seek to avoid holding the next Enron, while others are forced to sell bonds as soon as they drop below investment-grade.

Credit Suisse First Boston and J.P. Morgan closed last Thursday the re-jigged bank deal for Collins & Aikman with a reverse flex and an altered "B" term loan. The deal was originally scuppered in the wake of Sept. 11 due to market conditions, and when it returned pricing was bumped up 3/4% on the "B" at launch three weeks ago, despite lower leverage numbers (LMW, 12/8). But after a successful bond offering, the size of the bank deal was trimmed down and a reverse flex was executed on the reduced tranche, commented one banker. Another banker said the "B" finished at $300 million with a LIBOR plus 4% spread--the original pricing on the deal. The four-year revolver is now $175 million and the term loan "A" is $100 million.

Citibank is syndicating a $200 million credit line for Dallas-based Aviall after nudging out previous lead FleetBoston Financial with the offer of a debt and equity package. David Leedy, director of investor relations at the aviation parts and aftermarket services provider, said talks were held with both Citi and Fleet, but the impact of Sept. 11 on the markets blocked any chance of a straight loan. "The company could have financed this deal prior to Sept. 11 without the equity investment," he said.

BMO Nesbitt Burns has created a debt products group in Chicago to put the firm's entire spectrum of U.S. debt products into one group, said David Hyma, vice chairman of capital markets in Toronto. Hyma said the group will create products that will link corporate debt issues and hedging strategies and will use over-the-counter derivatives.

The warmest November in North American history has sent some U.S. power companies scrambling to buy protection against the rest of the winter being equally mild. Weather derivatives traders in New York reported a rush to buy protection among east cost energy companies that balked at their chance to hedge their weather risk for the winter in October, when most mid-western energy players, such as Alliant Energy in Madison, Wis., bought protection (DW, 12/3).

Dynegy Corporation's bank debt traded down to 85 last week on anticipation of downgrades for several energy companies. The credit had been a par name and was said to be sold off by original holders. The size of the piece could not be determined. NationsRent's debt was quoted into the mid-50s following an announcement early last week that the company had filed for Chapter 11 protection. The company announced on Dec. 17 that it had filed in an effort to restructure its debt and has obtained $55 million of debtor-in-possession financing led by Fleet Bank. An estimated $50 million of Leap Wireless' bank debt has traded in the 76 range this week, which is down from 78.

Abbey National Financial Products has structured the first USD10 billion arbitrage asset-backed commercial paper program to be structured entirely as a synthetic product. Adrian Mallinson, credit derivatives structurer in London, said it set up the program to transfer the credit risk of highly-rated asset-backed securities off its balance sheet with minimal credit enhancement. The reference entities will likely include, credit card debt, student loans and mortgages and over 75% of the portfolio will be AAA rated.

Aquila Energy is developing what is believed to be the first guaranteed crop-yield derivatives for U.S. agricultural middlemen and plans to hedge the products in the weather derivatives market, said Ravi Nathan, general manager in Kansas City. The derivatives are due to be rolled out in time for the spring growing season.