Search results for

ORIX Capital Markets (OCM) is looking to hire eight senior fixed-income credit analysts over the next two months to join its 20-person corporate finance group, which invests chiefly in below investment-grade and Latin American debt. The corporate finance group will also move from Baltimore to join its commercial mortgage securities investing and servicing team at its 270-person Dallas headquarters in March, according to Sheppard Davis, head of the group. OCM has built a new trading floor in Dallas to accommodate the group. Davis would not specify total taxable fixed-income assets under management, though he says it is in the "multiple billions" of dollars.

Adelphia Communications' bank debt ticked up from 99 3/8 to 99 7/8 in response to an upgrade from Moody's Investors Service, while competitor Charter Communications traded off a bit at 98 7/8. A market player said that Charter, usually a neck and neck competitor with Adelphia, may have traded down slightly as its ratings remained at Ba3, a notch below Adelphia. Other traders suggested portfolios thick with Charter might have traded out for a piece of its competitor. One source said roughly $2.5 million of Adelphia changed hands midweek with an institutional account as the buyer. Calls to officials at the companies were not returned by press time.

Ultimate Electronics received an additional $25 million in financing from PNC Bank through an amendment to its Wells Fargo-led $50 million credit line that closed last September as the company needed more funding to support company growth and Wells Fargo would only extend an additional $5 million to the company. PNC was brought in to pick up $25 million in the recent adjustment. "I believe because of Sept. 11, it was a little difficult to get all of it at the end of September," said Alan Kessock, cfo of Ultimate, explaining that the company sought $80 million from Wells Fargo in the beginning of September, but had to raise the loan incrementally due to market conditions. Kessock speculated Wells no longer wanted additional exposure to the company after September.

The Russian corporate bond pipeline is beginning to grow and London-based emerging market debt bankers estimate there are up to 20 companies looking to do deals. "Russia is where the action is going to be," says Jan Mutsaers, head of debt capital markets for emerging Europe at ING Barings in London. Mutsaers says ING bankers will be pitching innovative structures in Russia to help lower-rated companies get deals done. Another emerging Europe banker says more Russian blue-chip companies need to come to market before it opens up to the second-tier. Companies such as Gazprom, Tyumen Oil, Sibneft and Vimplecom--a mobile phone services company--are likely to be the first out of the gate, he adds.

Analysts are recommending that investors protect themselves from possible ratings downgrades in the European telco sector by shifting into step-up coupon bonds. Rick Deutsch, head of European high-grade credit research at BNP Paribas in London, recommends that investors in France Telecom (Baa1/BBB+) and Deutsche Telekom (A3/A-) switch to step-up issues. Both companies are under ratings pressure and Deutsch says that even though 35 to 50 basis points spreads between step-up bonds and plain vanilla bonds are wide, the market tends to undervalue step-ups. Depending on investors' credit view, the step-ups offer value, he argues.

Tower companies, such as American Tower, SpectraSite Holdings, and Crown Castle Communications traded off two to four points this week following news of weak cell phone subscriber growth, dealers said. Traders quoted American Tower at 90-92, SpectraSite in the mid-80s, and Crown Castle at 98 1/2, and said a combined $10-20 million had been trading on all of the names by last Thursday.

Investors and analysts are divided over whether bondholders ofTyco International should take profits after last week's dramatic tightening, or hold on for what they estimate could be between 30 and 60 basis points of additional value. Last Tuesday, the 6.375% notes of '11 tightened from 245 basis points to 130 basis points over Treasuries after the company announced plans to split into four separate companies and pay down $11 billion in debt.

UBS Warburg held a bank meeting for the $175 million for Hollywood Entertainment loan last week in New York. The deal, consisting of a $25 million revolver, and a $150 million term loan, has spreads of LIBOR plus 3 1/2 % and LIBOR plus 4%, respectively, and the tenor on both tranches is roughly four years. A banker commented the amortization schedule is good, with 40% in the first two years and with 0.9 x senior leverage, the deal is structured fairly conservatively. Response is said to have been positive, with a number of accounts attending the bank meeting and closing is expected in Mid-February, concurrent with the raising of $100 million of equity.

Total investment grade issuance has now topped $45 billion month-to-date. With a week to go, the month may end up topping the previous estimate of $40-50 billion. The primary market was slow coming off the holiday weekend as increased volatility in spreads and rising Treasury yields dissuaded issuers from accessing the market. That said, investor appetite still appears healthy and the strong demand for the Ford convertible-upsized to $4.5 billion, the largest deal ever in that market-generated positive momentum. Important deals of the week included a Household's $2.5 billion 5-year, Italy's $5 billion global and a two-tranche $2 billion deal for GMAC. The high yield new issue market also remains active, carrying over from above average months in November and December. A total of $7.6 billion of high yield debt has been issued thus far this month as flows into high yield funds and the prospect of a drop in default rates augers well for the sector.

WestAM, the asset management arm of the WestLB Group, will begin to employ credit derivatives in its €2.7 billion fixed-income portfolio, which is run out of its London office. Nigel Jenkins, head of global fixed-income and currency, says the firm will use credit derivatives as a hedging tool as part of its wider strategy to increase its allocation to spread products and reduce its exposure to government bonds. "This is the way the whole fixed-income [investment community] is going to generate excess returns," says Jenkins, noting that governments are issuing fewer bonds and the absolute yield on govvies is relatively modest.

Goldman Sachs outbid other banks, including incumbent Bank of America, for Solectron Corp.'s new $500 million bank deal by proposing a three-part financing package that re-works the company's capital structure. In addition to refinancing an outstanding $100 million Bank of America-led credit facility, the company was looking to raise capital to pay down $615 million in puttable Liquid Yield Option Notes (LYONs) underwritten by Merrill Lynch and coming due at the end of this month. In a reverse twist of what has been the rallying cry of commercial banks using their lending capabilities to win investment banking business Goldman leveraged its investment banking prowess into a mandate for the bank credit.