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London-based Gartmore Investment Management, which runs a $59 million European bond fund, may add tobacco credits such as Imperial Tobacco and Gallagher to its portfolio as a defensive move and to bring more diversification. Richard Hodges, portfolio manager, says Imperial Tobacco and Gallager, unlike British American Tobacco, have limited exposure to the U.S., are well-positioned to weather a further downturn in the global economy and have underperformed significantly year-to-date. The firm is trying to determine at what point these credits offer value, but doesn't have spread levels in mind at the moment. Since the terrorist attacks on Sept. 11, the firm has been reducing its credit exposure and is concentrating on consumer non-cyclicals, utilities, and high-quality subordinated debt in the three- to five-year portion of the curve, from financials such as Barclays Bank and Italy's IMI Sao Paulo.

F&C Management's $1.8 billion euro-sovereign bond portfolio is overweight Greek government bonds, on the view that the credit offers value and yield. Lionel Oster, portfolio manager in London, says Greece's macroeconomic fundamentals continue to improve, and the upcoming Olympics in 2004 should spur domestic demand. He is also optimistic that Greece will continue to reduce its debt, which now stands at 98% of GDP, to 95% by year-end. The Greek government is enjoying stability and is in a good position to maintain its expenses at a reasonable level, he added. Greece's 10-year bond traded at 47 basis points over German bunds last week, and Oster predicts that will tighten to around 35 over the next 12 months. If Greece performs as expected, the fund will take profits and revert to the core European markets Germany and France.

Credit Suisse First Boston is set to launch this week its long-awaited deal for Akron, Ohio-based Roadway Express, backing the acquisition of Arnold Industries. The $325 million credit comprises a five-year, $150 million revolver and a five-year $175 million term loan, with a spread of LIBOR plus 21/ 2%, based on a grid. There is a 40 basis points commitment fee on the revolver. CSFB syndication officials did not return calls.

The Deutsche Boerse will add sub-indices for sterling-denominated, non-gilt government bonds, state-guaranteed bonds, collateralized bonds and corporate bonds to its sterling-denominated iBoxx index family by year-end, says Andreas Brunner, a member of the Deutsche Boerse's index team in Frankfurt. Sterling-denominated government indices debuted earlier in the year.

Dresser's credit has stayed afloat in a market with sinking levels, with about $5 million of the paper changing hands last week around 100. "It's got good diversity and a good coupon," said a dealer, explaining why the paper has held up despite other steady names, such as Nextel Communications and Charter Communications, losing footing. Nextel has dropped from the low 90s to the mid-80s and Charter has softened to the mid-90s from the high 99 range. Buyers and sellers active in Dresser could not be ascertained.

Federal-Mogul's bank debt softened to a bid-offer spread of 50-52 last week, coming back about a point after a high two weeks ago of 52 1/2-53. No trades were reported, and dealers who chatted optimistically two weeks ago about the bankruptcy protection were more cautious last week, saying the restructuring may be more drawn out than originally thought. "The market just stinks right now, and people are concerned that it could take longer for the company to get out of Chapter 11," a dealer said. "Their core business is hurting at the same time [asbestos] liabilities are hurting them." Another market player, trying to explain the work ahead for Federal-Mogul, put it another way. "It's like [Austin Powers nemesis] Fat Bastard trying to run uphill against Jesse Owens," he said. The Southfield, Mich.-based company manufactures car parts. Calls to G. Michael Lynch, cfo, were referred to spokesman Jim Fisher who declined to comment.

Investor concerns over the plummeting all-in borrowing rate has prompted Lehman Brothers to create a LIBOR floor on its $450 million term loan for Tesoro Petroleum. The move, believed to be the first of its kind, is seen as one potential solution to investor fears over current returns and could be implemented on other credits as long as rates stay as low as they are, said investors and bankers. Repeated calls to Lehman Brothers' syndication officials were not returned. David Chacon, director of investor relations for Tesoro, declined to comment on the rate floor.

Ruth Yang, associate director, in the risk solutions division of Standard & Poor's has joined the LSTA as director of marketing data, to spearhead the effort to capture actual trade data and work on the leveraged loan index, launched last week. Yang explained the index is going to be important in the market and the opportunity to facilitate the flow of information is a great opportunity. Today is Yang's first day on the job. At the rating agency, Yang was responsible for recovery studies, primarily focusing on bankruptcy.

Merrill Lynch and Credit Suisse First Boston will be leading the debt financing backing Northwest Natural Gas' acquisition of Enron's Portland General Electric utility. CSFB advised the seller, Enron, and Merrill advised the buyer, Northwest, with the banks leading $2.1 billion in loans to back the $1.86 billion cash portion of the transaction and refinancing $450 million in revolvers. Bruce DeBolt, senior v.p., and cfo of Northwest, said in a conference call that a new holding company will be formed that has financing commitments consisting of a $100 million revolver, a $150 million "A" term loan, a $500 million "B" term loan, a $300 million term loan "C" and also a $450 million capital markets tranche. Enron will provide $200 million in non-tax deductible FELINE Prides and a $50 million equity investment. "It's complicated stuff," said DeBolt.

Moody's Investors Service has placed the debt ratings for The Ackerley Group on review for possible upgrade following the announcement that Clear Channel Communications is set to acquire the media company for $497 million in stock plus the assumption of all of Ackerley's debt. The rating review affects the $120 million senior secured credit facilities rated Ba3 and $200 million senior subordinated notes rated B3. Moody's expects Clear Channel to refinance Ackerley's bank debt and leave the bonds outstanding. Ackerley recently completed the $120 million facility led by Credit Suisse First Boston. Given Clear Channel's notably higher ratings and long history operating broadcasting assets, Ackerley's notes are also likely to be upgraded. Dan Evans, Jr., v.p., public affairs for Ackerley did not return calls.

Analysts in London are calling Railtrack's modest downgrade by Moody's Investors Service too relaxed, too cautious and naïve. "It's almost a laughable downgrade [Moody's] has given. It does not indicate a default or potential losses," said Jans Jantzen, analyst at Bear Stearns in London. "Railtrack is no longer investment grade," he emphasized.