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Germantown, Tenn.-based Equity Inns, a hotel real estate investment trust, has joined the club of companies in the hotel industry that have amended credit lines to relax covenant ratios. Howard Silver, president and chief operating officer for Equity Inns said the decline in the revenue of the hotel industry following the Sept. 11 terrorist attacks put Equity Inns in a position where it did not think it would make the various covenants. "The bank group are pretty understanding as most of these banks are in the other hotels' lines," he said. "The industry has been smashed." Other hotel companies that have sought covenant relief include Starwood Hotels & Resorts Worldwide and RFS Hotel Investors

Richer spreads on loans and increased interest from investors looking for euro credit exposure have given arbitrage collateralized debt obligations the needed boost to fill the European arbitrage pipeline. Investors have long scoffed at the CDO market in Europe, saying there was a lack of high-yield collateral and liquidity. But pricing and structural developments in the European leveraged loan market are making loans there look more like their counterparts in the U.S. The latest deal to capitalize on increased interest is Prudential M&G Investment Management's E513 million ($458 million) Panther II CDO, which is buying up assets now.

Maritrans secured an $85 million credit facility on Nov. 27 to support additional funding needs at lower pricing. Walter Bromfield, treasurer, explained the company tapped the bank debt market to refinance $66 million in debt--a portion of which was a $33 million indenture with a fixed rate of 91/ 4%. By replacing the bonds with floating-rate debt, the company was able to finance its debt at a cheaper rate. The new deal is priced against a grid based on performance beginning at LIBOR plus 41/ 2%. In addition to the bonds, a $33 million revolver was also part of the overall refinancing on the deal. "This was an opportunity to lower the cost while increasing the financing," said Bromfield.

London-based industrial analysts are concerned that the reaffirmation of Fiat's Baa2 stable rating from Moody's Investors Service last week is not accurate given the amount of work the company has to do to de-leverage. "Given the fact that they're restructuring so heavily and haven't performed well even in good times, I'm surprised with the stable outlook," says Victoria Whitehead, analyst at Bear Stearns in London. "It's not a good company. The rating is deceiving," she adds. Whitehead believes Fiat should be rated Baa3 with a negative outlook. Calls to Eric de Bodard, managing director at Moody's in London, were not returned.

Federal-Mogul's bank debt traded up three points early last week to 58 in a $5 million trade, despite predictions in the market that a "buy now" push will further depress the sector down the road. While some said they expect a quick bankruptcy exit and a strong recovery for the auto sector, others said zero-percent financing packages will hurt future sales. Calls to Mike Lynch, cfo, were referred to spokeswoman Kim Welch and were not returned.

Westar Capital, a buyout fund, received a hybrid $75 million asset-based facility for the purchase of Igloo Products last month. Michel Glouchevitch, managing director at Westar, said Fleet Capital was a natural choice because of the longstanding relationship the fund had with the bank. "We had familiarity with the bank and knew they had the wherewithal to underwrite the transaction," he said, adding he's pleased with the package that was arranged. "Fleet has a long relationship with Westar and was invited to join," explained Linda Jahnke, senior v.p. at Fleet.

Gaming and travel investors and analysts say they are hard-pressed to find credits they can recommend, as many names are trading at higher prices than they were before Sept. 11. John Maxwell, gaming and lodging analyst at BNP Paribas, says that pricing in the sector reflects investors' willingness to overlook weak operating numbers through at least the first quarter in an attempt to be fully invested by year-end. Given that benchmark credits such as the MGM Mirage 8.375% notes of '11 (Ba1/BB+) were yielding 8.5% last Tuesday, the only two credits in which he sees value are Pinnacle Entertainment and Royal Caribbean Cruises. While Maxwell does not yet have a buy recommendation on Pinnacle, he sees little downside risk in the 9.25% notes of '07 (Caa1/B-), which were trading at 88 last Tuesday. He believes investors have already factored weak operating performance numbers into the price of the bonds. Also, he believes Pinnacle may be looking for a joint partner to fund a property it is struggling to complete in Lake Charles, La. If it were to find such a partner, he says the bonds would trade up five points.

Goldman Sachs' $120 million deal for IPC Trading Systems garnered positive support last week, with one banker commenting on the tiny $15 million revolver, noting "this is what the market wants." Commitments to the $105 million "B" term loan could not be ascertained, as Goldman officials did not return calls. Pricing on the deal is LIBOR plus 41/ 2%, said a banker, and there is call protection at 102 and 101 in the first two years.

Allstate came to market at the end of last month with a $300 million collateralized debt obligation with leveraged loans representing the majority of the structure's collateral. A banker close to the deal said the vehicle, AIMCO 2001-A, is structured as an asset management deal--a traditional cash flow arbitrage structure. Calls to Allstate were not returned by press time.

Leap Wireless' bank debt jumped a few hurdles last week and traded up to 78 from the 74 range in a series of trades totaling close to $100 million. Goldman Sachs reportedly traded a majority of the total. The telecommunications carrier is based in San Diego. Calls to spokeswoman Sarah Thailing were not returned by press time.

Merrill Lynch's latest spate of personnel cuts has dealt a severe blow to its attempt to remain a formidable high-yield trading and underwriting operation, say senior buy- and sell-side high-yield executives. Many speculate that a lack of familiarity with the junk sector among senior management, coupled with sharp losses in its trading book, have been the basis for its rapid pullback. Indeed, former Merrill high-yield officials are said to be telling competitors that Merrill's high-yield losses will total more than $50 million this year alone.

Two auctions last week $20 million sales of each produced Huntsman Corp.'s pro rata paper, pushing levels up from the 66 range to 69. Dealers noted the surge in levels from 50 a month ago, but were unsure of what's supporting the levels other than the recent bond deal announcement by Lyondell (LMW, 11/25). J. Kimo Esplin, cfo of Huntsman Corp., could not be reached by press time.