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Tesoro Petroleum selected Lehman Brothers to both advise on its acquisition of some of BP's refineries, distribution and gasoline marketing operations and to provide Tesoro with financing for the deal amidst a turbulent market. Lehman restructured the acquisition financing in addition to having a LIBOR rate-floor incorporated into pricing on the bank debt to keep investors interested in the credit. David Chacon, director of investor relations, said the debt structure was altered in mid-syndication to increase the "B" term loan from $300 million to $450 million. And the company's bridge loan financing was downsized to $200 million from $350 million, providing a more balanced senior to junior-debt structure, he explained. The bridge loan facility is scheduled to be replaced with bonds next year. The LIBOR rate-floor was put in place at 3%, to assuage investor fears over lowering total returns due to a historically low LIBOR rate of 2.5% (LMW, 10/8).

Issuers are paying up to keep investors happy on acquisition term loans that have not been funded due to delays in deal closings. Buysiders said issuers have been offering generous "ticking" fees recently as a way to appease antsy investors in a tough market while they await funding on their allocations. Suiza Foods is offering investors 50 basis points as compensation for their patience, while International Multifoods has raised eyebrows with an unusually high 300 basis points fee--matching the spread on the loan. One market player suspects Multifoods may have credit issues unrelated to the acquisition explaining its hefty fee. John Byom, cfo at Multifoods, did not return repeated phone calls. Officials at CIBC World Markets, did not return calls about the increased fee.

Triad Hospitals' bank debt traded at 100 7/8 early last week with dealers attributing its resiliency to being a hospital credit. "It's defensive. If the world were to blow up, you'd still need it," a trader said. Triad has stayed in the 101 range since April, when it started to get a boost by resurgence in the healthcare industry. The Dallas-based company owns and operates 50 acute care hospitals and 14 ambulatory surgery centers primarily in small-sized cities in 17 countries. Calls to Burke Whitman, cfo, were referred to Pat Ball, v.p. of marketing, who declined to comment.

About $18.8 billion in new supply hit the market, with single A and up issuers dominating the calendar. Although high volatility and a downward bias in the equity market may have deterred some lower-rated companies from coming to market, there is nevertheless a sizable high yield calendar growing with visible supply of close to $2 billion. The highlight of the week was the Ford deal (figures not included in the charts because books hadn't closed as of Thursday evening), which showed that investors still had significant cash to put to work in the market. Although news of the deal initially pushed Ford spreads 15-20 bp wider, the bonds closed Thursday at Tuesday's post-downgrade levels. The market has clearly opened up for cyclical investment grade companies and those, like ILFC, directly affected by the 9/11 terrorist attacks.

Wyndham International's bank debt is starting to resurface, treading water in the 78-82 range last week. The increasing rate loan is in the 77-78 range, the revolver last traded in the 80 range, and the "B" paper traded in the 79-80 range. A dealer explained the levels have been supported by the company's recent announcement that occupancy rates have improved. Also, the distribution of funds from asset sales will be used to pay down a variety of debt, as opposed to simply paying down the revolver. "This gives benefit to everybody," he said. Wyndham has also recently secured covenant relief.

The CIBC World Markets and Citibank-led deal for CommScope is reportedly picking up interest after some sweeteners were added, but buyside reticence to invest in primary deals and some credit-specific issues are still making syndication a very tough job, investors said. Responding to investor demands for upside, CIBC and Citibank flexed up pricing 1% from LIBOR plus 3 1/2 % on the $225 million term loan "B", also being offered at a 2 1/2 % discount. Call protection of 103, 102, 101 is also being thrown in and the upfront fees have been bumped up for commitments of $20 million and $10 million. The upfront fee is now 1 1/4 % and 1% from 3/4 % and 1/2 % respectively. Calls to bankers at Citibank and CIBC were not returned.

Sponsors say banks are not lending, investors say sponsors are not willing to chip in more equity and banks stuck in the middle say the impasse between the two parties makes LBO deals a tough sell. Asked if the stalemate was slowing LBO deal flow, one investor joked, "It's hard to slow down a parked car."

Several buyside firms are considering increasing their exposure to property and casualty insurers--the same companies whose bond prices plummeted in the wake of the Sept.11 attacks. Graham Allen, head of the roughly $50 billion taxable fixed-income portfolio at Wells Capital Management, says the firm wants to take advantage of spread-widening and the p&c companies' presumed ability to raise premiums going forward.

In stark contrast to their peers in other investment banking areas, structured finance bankers in London are going to see strong bonuses this year, perhaps even a little stronger than last year's, according to London-based executive recruiters. This good news is largely thanks to a booming asset-backed market, targeted to top €115 billion this year. On the sales and trading side, however, bonuses will be less, but not cut as drastically as in other areas, such as all facets of equities business, according to Robin Keck, executive recruiter for debt capital markets at Michael Page International. Mark Sullivan, executive recruiter for DCM at Jonathan Wren, agreed that debt pros will be the envy of others. "Universally, bonuses will be pretty poor this year, but fixed-income specialists might be the exception."

Moody's Investors Service's employees may move back to their offices on Church Street by the end of the month, says Michael Kanef, managing director of structured finance. Closed after the Sept.11 attacks, Moody's offices have not reopened since the tragedy because the building was declared part of Ground Zero by New York City. Moody's officials are expecting city officials to approve the reopening by the end of October, but are still awaiting confirmation, says Kanef, reached at his New Jersey office.

The move to create an online clearinghouse for loans has been shelved because of a lack of interest among loan market players, according to Operations Management, a Loan Market Week sister publication. The platform was being formulated through a joint venture between The Depository Trust Company and Reuters, but the partnership could not get a solid commitment from banks, said Jeff Reichert, head of business development for Corvalent, the Reuters unit that was developing the platform. "The clearing and settlement side was not a priority for these firms. They were more interested in trading the loans electronically," Reichert said.

Bear Stearns International is planning to grow its London-based interest-rate product group by nearly 50% in the coming months, according to BW sister publication Derivatives Week. This is part of the firm's ambition to become a larger player in the European market, says George Polychronopoulos, senior managing director. Polychronopoulos, who will lead the effort, joined last month from Deutsche Bank, where he was most recently head of marketing to Scandinavia and Greece: previously he had been head of Scandinavian and Greek interest-rate products. At Bear Stearns, his position is parallel to that of Jérôme Camblain, who runs the sales side.