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Investment-grade telecom credits are well-positioned to outperform the rest of the corporate market in 2002, according to two runners-up in the 2001 Institutional Investor All-America Fixed-Income Research Team. Scott Shiffman, telecom analyst at Lehman Brothers, says the sector is at near-historic wides on an overall spread basis relative to the Lehman Brothers investment-grade credit index. Telecom spreads comprised 129% of the index last week, just off their cheapest levels of 132%. Shiffman says fair value is approximately 110%.Doug Colandrea, analyst at Morgan Stanley, expects telecom credits to outperform the broader corporate market by 20 to 30 basis points in 2002, as companies focus on strengthening their balance sheets and producing free cash flow. He advises investors to focus on senior unsecured debt in 10-year maturities, which he says is the most liquid part of the curve.

Enron Corporation's 364-day revolver fell to 75-80 from 99 last week and the market waited to see whether the company would merge with Dynegy, a competitor in the energy trading and power business. As LMW went to press, talks between the two companies had been put on hold while Moody's Investors Service reviewed Enron's credit. Calls to Jeffrey McMahon, cfo, were referred to spokeswoman Sharonda Stevens, who did not return repeated calls. Calls to the Dynegy investor relations department were referred to spokesman Steve Stengel, who confirmed discussions with Enron, but declined to elaborate further.

Investors appear confident environmental concerns over the use of salt on Canadian roads will not materialize into legislation that would put the brakes on Compass Minerals, IMC Global's salt business. J.P. Morgan, Deutsche Bank and Credit Suisse First Boston are leading the $410 million credit backing Apollo Management's acquisition of the salt business, launched two weeks ago. "This is a good business with a reasonable purchase price and the management team is solid," explained an investor. There is a degree of concern that highway de-icing is hazardous to the environment and legislation is being evaluated, he said.

Syndication pros say selling subordinated tranches of collateralized debt obligations has become more challenging recently as insurance companies, historically the primary investors in the tranches, have become more cautious in the wake of increased volatility and new accounting standards. Bankers say triple-B and double-B tranches on deals have become a challenging part of filling out the capital structure on CDOs, much like the equity piece. Filling the void -- for now -- are managers of CDOs of CDOs that are buying new issues and impaired assets in the secondary market from insurers looking for a way out.

J.P. Morgan Securities has expanded the scope of responsibilities for three of its asset-backed securities bankers:David Howard, managing director, Brad Dansker, v.p., and Matt Whallen, v.p., according to Andrew Dym and Scott Davidson, the two co-heads of North American ABS. They say the move was done to allow them to spend more time focusing on long-term strategy.

Lombard Odier, the Geneva-based bank, has added three credit specialists to its offices in London and Amsterdam, says Paul Osborne, head of marketing and client relations in London. Osborne says Lombard Odier plans to hire two more credit analysts to add to its team of five based in Geneva, to help manage the work load generated by the increasing interest in European credit.

Merrill Lynch and Credit Suisse First Boston have just finished a series of one-on-one preliminary discussions with key lenders of Northwest Natural Gas for the $2.1 billion loan financing the acquisition of Enron's Portland General Electric utility and CSFB is also preparing to launch a $600 million loan for TECO Power. A banker said the Teco deal is expected to go into primary syndication by year-end, and will be used to refinance the acquisition of Frontera and fund the construction of two plants in Arkansas and Mississippi.

AIG Global Investment Corp. has brought American General's investment-grade fixed income operations from Houston to New York, while moving the bulk of its own high-yield operations from its SunAmerica affiliate in Los Angeles to Houston, according to senior AIG officials. As a result of AIG's acquisition of American General, the combined firm now manages some $180 billion in (mostly fixed-income) assets domestically. A senior AIG official says management of high-yield was given to Gordon Massie, who had served in that role at American General, because American General's high-yield group had outperformed that of SunAmerica. An AIG official declined to provide performance numbers, and attempts to procure them elsewhere were unsuccessful as of press time. American General's high-yield group did not oversee mutual funds, whose performance is published daily, but were in charge of "managed funds," which traditionally do not release their performance. Massie declined comment. Scott Richland, formerly head of high-yield bonds and leveraged bank loans, is now only head of bank loans, according to Sonia Fiorenza, a SunAmerica spokeswoman to whom he referred calls. Richland reports to Scott, according to a senior company official.

American Tower's levels took a hit following a disappointing third-quarter earnings release that indicated demand for cell tower use will diminish in the coming year. The "B" paper dropped down a point to 91 immediately after the release, then landed in the 89 range. American Tower is based in Boston. Calls to Joseph Winn, cfo, were not returned by press time. Calls to spokeswoman Ann Alter also were not returned.

Macquarie Corporate Finance has hired John Daly from J.P. Morgan Securities as division director for the U.S. private placement and structured finance market, says Tom Capasse, division director for principal transactions. Daly, who will report to Oliver Yates, ceo, will be in charge of origination, structuring and distribution of senior and subordinated debt to U.S. institutional investors. Daly says he made the move because he was attracted by the entrepreneurial aspect of the position, as it involves starting a new group. He worked with J.P. Morgan for 14 years and was most recently a v.p. in structured finance, in charge of private placement. He reported to Joel Glansky, managing director. Adam Castellani, a spokesman for J.P. Morgan, declined to indicate whether Daly's position would be filled.

Stephen Creaturo has joined Barclays Capital in New York as a director in its interest rates sales group, specializing in non-dollar denominated fixed-income accounts. He joins from Commerzbank Securities, where he ran its New York-based fixed-income trading operations. His slot is a new one, and is part of the firm's year-long growth strategy. He is reporting to the New York head of fixed-income sales, John Connor. Creaturo had worked at Barclays from 1994-1999 in its London office, where he had become head of non-dollar interest-rate product trading before he left to join Commerzbank Securities.

Dealers seemed to breathe a collective sigh of relief last Wednesday evening following Allied Waste's third-quarter earnings release as fears of more credit defaults in a soft economy had the market bracing for bad news. Dealers noted that Allied's earnings loss was not as bad as they had expected, and that overall the credit still appears relatively strong. Bids for the paper promptly notched up to 96 1/8-7/8 from the 96 range earlier in the day. An estimated $10 million had traded by late Wednesday. The trash-hauling company is based in Scottsdale, Ariz. Calls to Mike Burnett, head of investor relations, were not returned.