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Emmis Communications bank debt jumped to slightly above 100 from the 97 range on news of an amended credit facility. Dealers reported two $5 million chunks changed hands. Early last week, Emmis announced financial covenant relief that would last until Dec. 1, 2002. The amendments allow for the company's leverage ratio to increase to a total of 8.5 times over the next four quarters. Walter Berger, executive v.p. and cfo, stated that the company is committed to reducing its leverage. Calls to his office for additional comment were not returned by press time. Kate Healey, director of media and investor relations, declined to comment.

Moody's Investors Service has downgraded Enron's senior unsecured ratings to Ca from B2 and confirmed the Not Prime ratings of its commercial paper after the disgraced fallen giant, along with some subsidiaries, filed for voluntary Chapter 11. The downgrade is based on the belief that recovery rates will be low on unsecured claims. Citigroup was the lead arranger for a $3 billion unsecured credit line to Enron, with J.P. Morgan serving as co- arranger.

EOTT Energy Partners has inked an interim $150 million letter of credit agreement with Standard Chartered, as the firm attempts to forge its own credit lines independent of Enron. Enron owns a minority position in EOTT, but has also provided the company with a $1 billion credit line, explained Wade Gates, a spokesman for EOTT. The lease crude purchaser of oil has been seeking a new $300 million revolver for some time, and the decision is unrelated to the developing Enron situation, according to Susan Ralph, treasurer (LMW, 11/19).

Buysiders and traders say the chemical sector has made a quick turnaround in the last couple of weeks, with levels shooting up on a few benchmark names as investors look to deploy extra cash gleaned from paydowns on existing deals. "You can't find chemical paper anywhere," said one loan investor. Lyondell, Equistar, Hercules, and Huntsman International have all jumped significantly as loan investors compete with bond investors for a better relative value on the names.

Bids on McLeodUSA firmed to 74-77 from the low 70s early last week on news that $140 million of the company's revolver would be paid down. Last week the company reached an agreement with Forstmann Little & Co. on a financial restructuring plan. McLeodUSA recently filed a prepackaged Chapter 11 plan. Traders said the significant reductions in bonds and bank debt were driving the levels. "It eliminates some of the debt on the company and means less leverage," said a dealer.

Synthetic collateralized debt obligations using investment grade names as referencing collateral are the structures most vulnerable to fallout from Enron's tumble, according to ratings agencies. Managers of cash flow arbitrage deals, ironically, by and large will avoid being hurt by Enron because they invest in "risky" high-yield bank debt and bonds. Enron was an investment-grade name when its obligations were referenced in default swaps in many synthetic CDOs, and Nik Khakee, analyst at Standard & Poor's, said those deals can expect to feel some pain.

J.P. Morgan, Credit Suisse First Boston, Deutsche Bank and Merrill Lynch are bringing back a reworked bank and bond deal for Collins & Aikman, backing the acquisition of Textron's auto-trim business for sponsor Heartland Industrial Partners. The expectation is the bond market will be more receptive than in September when the original deal was to be launched. The acquisition, announced in August, was put on the backburner following Sept. 11 and the collapse of the high-yield debt market, explained John Peisner, senior v.p., investor relations for Collins & Aikman. A reworked deal with improved debt to EBIDTA ratios, a reduced price and more stock as currency, is the other major factor that should ensure completion of the financing by year-end, he noted.

Citibank and Merrill Lynch's planned recapitalization for Paragon Trade Brands has been scuppered after Tyco International agreed to buy the diaper manufacturer for about $565 million in cash plus the assumption of $85 million in debt. A $425 million recapitalization for Wellspring Capital Management was coming to market, said a banker familiar with the proposed loan. But Tyco has stepped in and is unlikely to need any kind of financing, as it is such an immensely capitalized company, he said.

Following a hefty initial public offering and some stellar gains this year, Weight Watchers International is refinancing its bank debt via administration agent Bank of Nova Scotia and lead arranger Credit Suisse First Boston. The company, described in a September 10-Q as significantly leveraged, has improved its profile since a successful IPO in November and is looking to trim its borrowing spread, said a banker familiar with the deal. The company's $418 million IPO tipped the scales as the largest IPO of the month.

Young Broadcasting has received a covenant amendment to its credit facility, reducing its operating cash flow requirement to address weak ad spending. In light of weaker ad sales, the company increased its various debt to operating cash flow levels, resulting now in a minimum operating cash flow level of $110 million. Currently the company's operating cash flow is $154 million. "This is a recognition that our operating cash flow is significantly lower and softening in the advertising media expenditure market," said James Morgan, cfo. The company was also given consent to issue more senior unsecured notes to be used to pay down bank debt. Young Broadcasting, based in New York City, owns 12 television stations.

Bookrunner Credit Suisse First Boston last Thursday priced the first South Korean primary collateralised bond obligation, or corporate club funding vehicle, to be sold internationally. The $250m deal, Korea Credit Guarantee CBO Ltd, was rated Baa2 by Moody's on the strength of an irrevocable credit facility from the Korea Development Bank (KDB), covering all principal, interest and expenses. The rating will track that of KDB.

Australia Defying the global economic slowdown, Australia has reported GDP growth of 4% for the first three quarters of the year. GDP figures released this week revealed that the economy grew 1.1% in the third quarter, an increase of 2.5% year on year. The result follows news last week that the US economy is officially in recession. The growth is stronger than even the Reserve Bank of Australia had suspected, and the bank recently cut its overnight cash rate to a historic low of 4.25%.