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Zurich Scudder Investments, which manages £14 billion in European fixed-income assets, plans to sell off its positions in Swedish government bonds once the five-year spreads versus bunds tightens to about 40 basis points. Last week, the five-year spread versus bunds was about 60 basis points. Zurich Scudder has built up its position in Swedish government debt over the past few months. Sandra Holdsworth, London-based portfolio manager, says the firm has bought the '06 and '08 bonds recently because the currency has stabilized, the curve has not discounted potential interest-rate cuts and inflation is dropping. The firm sold Eurozone government bonds to fund the purchase. Roughly 82% of Zurich Scudder's £30 million Threadneedle European Bond fund is devoted to govvies, 13% of which is Swedish paper.

Advantus Capital Management is seeking to shorten duration by some 5% to prepare for an anticipated higher-interest-rate environment in 2002. Wayne Schmidt, a portfolio manager who oversees $1.65 billion in taxable fixed-income, says the St. Paul, Minn. firm will probably sell $25 million in 10-year U.S. agency debentures, and buy a combination of three- to four-year corporates and 30-year Treasuries before year-end. Schmidt says he is waiting for indications from the Federal Reserve that it has finished cutting interest rates before making the move. He would also like to see stability, if not improvement, in unemployment and consumer confidence data.

Marty Margolis, portfolio manager with Public Financial Management, says his firm will swap 20%, or $500 million, of its $2.5 billion portfolio, out of agency debentures into Treasuries over the next six weeks, should agency spreads remain at current levels. As an example, Margolis says both Fannie Mae and Freddie Mac two-year bonds have seen their spreads over comparable Treasury move from 45 basis points last July to 22 basis points, as of last Tuesday. Margolis adds that if the same spreads narrow by an additional 15 basis points, putting agency spreads at their tightest levels since Spring 1997, the firm will add 20%, or $500 million of its $2.5 billion portfolio, at the same time.

This chart, provided by Citibank/Salomon Smith Barney Inc., tracks bid-ask prices for par credit facilities that trade in the secondary market. It also tracks facility amounts, ratings, pricing and maturities.

Credit Suisse First Boston is once again the far and away leader in terms of volume of high-yield issues managed since 1998 that subsequently defaulted, according to BondWeek's third annual Turkey Tables. Morgan Stanley and Goldman Sachs moved up considerably, due mostly to the tremendous number of defaults this year.

Credit Suisse First Boston is once again the far and away leader in terms of volume of high-yield issues managed since 1998 that subsequently defaulted, according to BondWeek's third annual Turkey Tables. Morgan Stanley and Goldman Sachs moved up considerably, due mostly to the tremendous number of defaults this year.

The calendar picked up again, with about $20 billion in dollar issuance hitting the investment grade, high yield and emerging markets. The highlight of the week was the AT&T jumbo deal, which was the second largest U.S. corporate bond on record. AT&T doubled the deal size to $10 billion in the face of strong demand from U.S. investors reaching for yield given the gap down in Treasury yields since the suspension of the 30-year auctions. The 10- and 30-year tranches were each $2.75 billion in size and reportedly had books behind them of over $10 billion each. The 30-year bond, which priced at +295 bp to Treasuries tightened about 20 bp on the break. The 10-year tightened about 15 bp. Overall, the market seems in very strong technical position with significant pools of cash to be put to work in both Europe and the United States. The decline in the 'war' premium given the successes this week in Afghanistan has also underpinned spreads.

Dal-Tile closed a $400 million refinancing deal in late October, securing a smaller deal and eliminating its "B" tranche. "We're paying down our debt fast. We used a term A and a revolver because it gives us flexibility to pay down our debt," said Chris Wellborn, cfo. "A 'B' tranche is longer term; you pay more to have it sit there. We didn't need the long-term financing." The new credit breaks down into a $125 million "A" term loan, a $200 million revolver, and a $75 million accounts receivable securitization. "We wanted flexibility and we wanted financing to fund organic growth of the business," said Wellborn. Dal-Tile, based in Dallas, is a manufacturer, distributor and marketer of ceramic tile.

Enron subsidiary Eott Energy Partners, a lease crude purchaser and marketer of crude oil, is seeking a new $300 million revolving credit facility that includes letters of credit to replace a line provided by Enron. Susan Ralph, treasurer, explained the Enron line is $1 billion, but the company does not need a facility of that size. She declined comment on how the market is responding to Enron-related credits and would not name the banks leading the deal. One banker said ING Barings is the lead, though Ralph would only confirm it is one of the banks participating.

High-yield analysts and portfolio managers on the buy- and sell-sides expressed disappointment about the recent $150 million bond issue by ResCare (B2/B), a provider of services for mentally handicapped people. The 144a private placement carried a 105/8% coupon and priced at par. Last Thursday it was trading at 101. "It's the first healthcare issue that's not on fire after issuance," says a sell-side analyst, "I'm frankly surprised they got it done at all." One New York buy-side analyst, who did not buy the deal, concurs. "Usually when a new deal breaks, I get 15 Bloombergs [messages from traders indicating buying interest and price levels]. This time, I got two."