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Two collateralized loan obligations are in the market as managers see an attractive arbitrage between spreads on assets in the secondary market and on the liabilities they issue to support the deals. Both ING Capital Advisors and PPM America are in the market seeking to take advantage of spreads widening in their favor. Lang Gibson, CDO analyst at Banc of America Securities, said CDO arbitrage is at an exceptionally high level. "The CLO arbitrage spreads are better by 17%, rising from 330 basis points to 385 basis points," said Gibson.

Concert Industries closed a C$145 million deal in late September to consolidate five loans into one deal. Carey Edwards, cfo, said consolidating debt offers greater flexibility and a better interest rate. The company stuck with original lender National Bank of Canada because of its longstanding relationship with the bank. "They offer the best flexibility as well as business-like approach to banking," Edwards said. Concert Industries, based in Toronto, makes pulp-based products that are used in a wide range of items including baby wipes and home cleaning materials.

Countrywide Securities has moved Jim Griffin from mortgage analyst to the position of secondary trader in its asset-backed securities and mortgages desk. Jeff Staab, senior v.p. of home loan trading, says Griffin will report to both Staab and Kevin Doyle, senior v.p. ABS trading. Prior to his promotion, Griffin reported to Anand Bhattacharya, head of fixed-income research, says Staab.

Bonds of high-yield wireless companies traded up last week after AT&T Wireless (Baa1/BBB) announced that it would acquire affiliate TeleCorp PCS. Bids on TeleCorp 10.625% notes of '10 (formerly B3) rose from 93.5 to 114. Bids on other wireless affiliates of AT&T and Sprint, such as AirGate PCS (Caa1/CCC), Triton PCS (B2/B-) and Alamosa PCS (Caa1/CCC) rose two to four points each, in what analysts attribute to investor expectation of further acquisitions. But, Robin Lochner, wireless analyst at Deutsche Banc Alex. Brown, says that is a mistake. "Other than Dobson Communications, I don't think you can count on any near-term M&A activity in the sector." Bids on Dobson's 9.5% notes of '09 (B2/B) moved up five points, to 97.5.

The credits for FPL Group Capital and its subsidiary Florida Power & Light were oversubscribed with $4.2 billion of commitments coming across the two deals, according to bankers. Allocations were expected Oct. 10, but could not be ascertained. Salomon Smith Barney andBank of America led the syndication of the FPL Group's $2 billion credit; J.P. Morgan and First Union are the leads on the $1 billion deal for the subsidiary. Banks that signed onto one deal signed onto the other, said a banker. The allocations are likely to be scaled back rather than the deal being enlarged.

Gaming analysts and investors say there is room for further tightening on bonds of gaming companies that depend on air travel for a large percentage of their clientele, chiefly those operating in Las Vegas. Many had thought that the casinos would suffer as a result of decreased air traffic into Las Vegas (BW, 9/24). Though the whole gaming sector sold off immediately after Sept. 11, Vegas credits were particularly hard hit, trading down by as much as 15 to 20 points. They have since come back, but as of last week were still well short of their August highs. MGM Mirage's 9.75% senior subordinated notes of '07 (Ba1/BB+), which traders see as a benchmark Vegas name, were up to a 101 bid--well off its August level of 109, but much improved from a post-attack low of 90.

Genesis Health Ventures has closed a $515 million deal that was increased $100 million due to strong appetite for the health care sector. Lisa Salamon, director of investor relations at Genesis, said two weeks ago the company emerged from a "fun fifteen months of bankruptcy." Mellon Bank led the $290 million debtor-in-possession facility, but First Union, Goldman Sachs andGE Capital are leading the new facility. Salamon declined to comment on why the other banks stepped up to lead the exit financing. Upon oversubscription of the deal, Genesis decided to upsize the facility with a part of the proceeds paying off its outstanding DIP facility and the extra amount used to pay some leases and help finance the acquisition of American Pharmaceutical Services, said Salamon.

The slide in Global Crossing debt continued last week in the wake of the company's Oct. 4 earnings warning and management shuffle. The benchmark long haul communications provider saw bids on its 9.5% senior notes of '09 (Ba2/BB-) sink to 15 last Thursday, down from 21 the previous week. "There have been several downdrafts in the [high-yield wireline telecommunications] sector over the past year, but this latest downdraft since Sept. 11 has been more severe than others, and we think it represents real capitulation," says Trent Spiridellis, analyst at Banc of America Securities. He says "slowing demand for data services, shrinking budgets for capital expenditures, customer churn, soft wholesale demand and the company's general unwillingness to do business with competitive carriers" were among the factors contributing to Global Crossing's earnings miss, and the decline of the sector as a whole.

A handful of telecommunications names took a hit last week, each dropping about 10 points, with dealers saying a revenue projection by Global Crossing sparked the trading. Global Crossing's debt traded in the high 50s while McLeod USA traded in the low 50s. Bank debt for Level 3 hung in and traded flat at 60. "Their bonds are holding up because of a bond tender offer," a dealer said, noting this in turn is supporting bank debt levels. Exact volume could not be determined, but dealers said it was minimal. Late last week Moody's Investors Service lowered the rating on Global Crossing's bank debt to B1 from Ba1 due to the company's recent financial guidance that projects a revenue shortfall. The telecommunications company is based in Hamilton, Bermuda.

Land O'Lakes will carry significantly higher debt and have weaker debt protection measures following its acquisition of Purina Mills, putting pressure on the company's new $375 million senior secured bank deal. Moody's Investors Service assigned a Ba2 rating to the new credit. Land O'Lakes is paying $243 million for Purina and is also taking on $120 million in Purina Mills debt. Peter Abdill, senior credit officer at Moody's, said timing was an issue for Land O'Lakes. "Land O'Lakes did [the acquisition] at a difficult time in the agriculture cycle," said "Sometimes an acquisition in a downturn is the right thing to do; you can buy on the cheap. But they did it at a bad time in their business life." Land O'Lakes, based in Arden Hills, Minn., is a branded dairy food and agricultural supply cooperative.

Corporate bonds from the beleaguered industrial manufacturing sector are being pitched as good total return plays by investment-grade players, who argue that the recent spread pullbacks are overdone, given the income stream diversification in several of these names.

Stephen MacLennan, head of interest-rate derivatives trading at Standard Chartered Bank in Hong Kong, recently resigned in the midst of a reorganization of its interest-rate derivatives desk. Reasons for the departure could not be determined by press time. Mike Bass, head of interest-rate derivatives in Singapore and to whom MacLennan reported, declined all comment on MacLennan. MacLennan could not be reached.