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Bidding at last week's benefit auction (see story, page 2) got competitive as the night wore on, with charitable party-goers vying for one unusual item: lasik surgery. At one point, a specs-wearing dealer with his eye on the prize asked that all other vision-impaired party-goers "just clear the room." Then, as the stakes got higher, he offered to go Dutch with a fellow bidder. "What's your top price?" he asked. "I'll go $1,000. If we win, we'll each get one eye done."

McGlinn Capital Management will rotate 7% of its portfolio, or $91 million, from Treasuries into an evenly-weighted allocation of corporate and mortgage bonds. J.P. Weaver, portfolio manager, says he is waiting for pass-through spreads to widen by an additional 10 basis points versus Treasuries before buying the mortgage bonds. Last Monday, the 6% Freddie Mac pass-through traded at 152 basis points off the 10-year curve. He has already begun the corporate move. To finance the trade, Weaver will sell the short and intermediate part of the Treasury curve, on the view that Treasury yields are at their lowest levels in 10 years, especially on the shorter end of the curve. He remains bullish on long-term Treasuries, anticipating the curve will steepen.

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.

Brightpoint, a distributor of mobile phones based in Indianapolis, switched its lead lender from BANK ONE to GE Capital for its new $80 million revolver after putting the facility out to bid. Phillip Bounsall, cfo, said the company went with GE Capital because it offered the best package in terms of flexibility of the covenants and the amount of borrowing availability outside of the U.S. "Brightpoint was initially trying to increase the flexibility and extend the terms of the old loan. Of all the choices this [a new facility] seemed the most appropriate," he said. He declined to name the other banks considered or pricing on the new or old deals.

J.P. Morgan last week launched syndication of a $325 million credit for Revlon Consumer Products, the latest deal to hit the market with a rate floor to protect against falling interest rates. The institution of rate-floors on "B" term loans, intended as a short-term step, could be a longer-term and increasingly trendier measure as the Federal Reserve lowered its key federal funds rate for overnight bank loans for the 10th time this year to 2% last week. The average return on "B" term loans is now half the 10% of last year, wailed a banker, also bemoaning the accompanying high default rates.

TimesSquare Capital Management has hired Ron Bringewatt as a managing director and portfolio manager. Bringewatt, who joins from American General Investment Management, will manage and expand TimeSquare's high-yield presence. He notes that high-yield assets now total some $2.3 billion of TimesSquare's $44 billion under management. He fills a position that had essentially been vacant for several months after the departure of high-profile junk manager Alan Petersen. Amy Kennedy and Carlton Taylor, who had overseen the firm's high-yield assets on an interim basis, now report to Bringewatt, who in turn reports to Bob Moore, president and ceo. Moore did not return calls. Bringewatt will seek to hire between two and four senior credit analysts in the next three months, and has already begun interviews. He says another critical reason he was brought on is to improve the performance record of collateralized bond obligations that have not fared well since the departure of Petersen.

Owens-Illinois' bank debt traded up a few points last week, with the term loan trading at 94-95 and the revolver trading in the 91 range. "The company has had good numbers and is a strong company," a dealer said, explaining the positives for Owens-Illinois. However, the company's asbestos related issues continues to haunt the name. In its third-quarter report, the company noted that improving energy costs, reduced interest expense, and lower fixed costs are continuing to have a favorable impact on the company's performance. Owens-Illinois is a glass manufacturer based in Toledo, Ohio. Calls to R. Scott Trumbull, cfo, were referred to the investor relations department and not returned by press time.

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.