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European swap and credits spreads, usually highly correlated, have significantly de-linked lately, making triple-A to single-A corporate credits unusually cheap. A combination of the impact of the Sept. 11 attacks and Europe's slowing economy has pushed out credit spreads. And, swap spreads have tightened on the back of European governments increasingly becoming receivers of swaps, propelling the decorrelation, according to Ciaran O'Hagan, credit analyst at Lehman Brothers in London. "The [corporate debt] market is a bargain right now," said Keith Patton, portfolio manager at Deutsche Asset Management, in London. "You just have to pick the right one," he added.

Apollo Management ventured in the market last week with the acquisition of IMC Global's salt business for $640 million withJ.P. Morgan and Deutsche Bank set to lead a bank loan for Apollo. Credit Suisse First Boston will be providing a bridge to a bond offering and is expected to be on the bank credit. An equity investment of up to $160 million is said to be part of the deal.

Bank of Montreal and Bank of Nova Scotia's $685 million loan for Premdor is seen as a potential market bellwether, as it does not carry the baggage of other credits in the market right now and has good collateral coverage. Commitment levels could not be ascertained, but pricing has not flexed, said one banker, which is a good sign. A BMO official said pricing on the pro rata deck, comprising a $100 million revolver and a $100 million term loan is LIBOR plus 3%. On the $385 million "B," pricing is LIBOR plus 31/ 2%. There is also a $100 million asset-sale portion of the facility, he added. The credit backs the acquisition of Masonite from International Paper.

Brian Hessel, managing director and high-yield portfolio co-manager at J. & W. Seligman in New York, has resigned, according to a senior executive at the firm. Hessel could not be reached for comment. Paul Guidone, Seligman's ceo, was in Germany, and messages left for him were referred to Hank Green, a public relations executive at Adler & Associates, which represents the firm, who declined comment. Hessel's exit marks the second high-profile departure from the junk team at Seligman, which has some $2.5 billion in high-yield assets.Dan Charleston, who had been the top high-yield portfolio manager, was let go over the summer after the firm suffered heavy losses in its portfolio, according to the senior Seligman executive. As of last week, the high-yield fund was down some 17% year-to-date, according to Morningstar.com. Charleston could not be reached for comment.

Bear Stearns' $250 million term loan "B" for Appleton Papers, backing a management-led buyout, is said to be picking up commitments with a number of funds commiting a total of over $100 million to the credit. After launching to a skeptical buyside, the "B" had pricing flexed from LIBOR plus 31/ 2% to 41/ 4% and is being offered with a 13/ 4% discount. There is some concern among investors over the sunset nature of the business, since the main source of revenue is carbonless paper, considered a declining business (LMW, 8/10). The exact level of commitments could not be ascertained by press time.

Australian Magnesium Corp (AustMag) has made its third attempt to sell stock in four months. The deal is a A$500m equity raising, which has already been pulled back from the market twice. This time, the offer is not underwritten, as nervous investment banks fear putting their capital at risk in such volatile markets with so much latent event risk. Apparently undeterred, AustMag lodged the prospectus for its revised offer this week, ending two weeks of speculation after being forced to admit in late September that it was struggling to secure broker backing for the offer.

AUSTRALIA AMP Office Trust has increased its A$120m, 7.25% 2003 bond by A$50m via UBS Warburg. The increase, which is fungible with the original issue, was priced at 48bp over quarterly asset swaps, or 71bp over the 2003 Commonwealth government bond; a level which is only slightly tighter to the original launch price of 47bp in 1998. However, bankers noted that while the pricing originally tightened in, it later suffered along with the rest of the market from the cautious investor sentiment.

Dentsu, which controls 27.3% of Japan's advertising industry, would face an uphill task trying to convince institutional investors to buy as much as ¥54bn of stock, as it prepares for its IPO on the Tokyo Stock Exchange. So instead, the company has decided to place 80% of the 135,000 share offering at home, with most, 75% of that, going to retail buyers. The other 20% will be targeted at international investors. Dentsu plans to sell 135,000 shares, 25,000 of which will be new stock. Shareholders, including Kyodo News, Jiji Press and Dai-Ichi Kangyo Bank will sell the other 110,000 shares. Of the 110,000 existing shares, Japanese investors will be offered 83,000, with the remainder sold abroad. Merrill Lynch, Nomura and UBS Warburg are arranging the sale.

AUSTRALIA Oil and gas producer Santos on Wednesday night announced a A$250m off-market share buyback and the issue of a minimum A$250m in reset convertible preference shares. Merrill Lynch is sole bookrunner, underwriter and arranger. Macquarie Bank is joint lead manager.

Bankers working on the $500m offering to sell down the next stage of the government's Korea Tobacco & Ginseng (KT&G) shareholding, have reported strong investor interest. The combined convertible bond and GDR offering is due to be priced on October 24. The roadshow began last Thursday 11 in Hong Kong and books on the convertible bond have already closed. The bonds are quoted in the grey market at 101.75%-102.25%. "This is a clear indication that the market thinks we are on the button on the pricing," said a banker close to the deal.

As reported last week, pre-marketing began on Monday for the IPO of the Petroleum Authority of Thailand (PTT), after the government last week gave the firm permission to sell up to 30% of the company. Final details of the offering have yet to be decided but it is hoped that, despite volatile markets and the weakness in Asia, the deal can proceed. "We are proceeding cautiously and methodically, given the current climate," said one banker working on the transaction. "Nothing is certain in the current market and geopolitical environment. Pre-marketing is producing an encouraging response and the equity markets are clearly open for the right deal, at least for the moment," he added.

Despite the gloomy picture for world air travel, Deutsche Bank, Merrill Lynch and UBS Warburg were jubilant yesterday (Thursday) as the A$300m surprise placement they launched was increased to A$450m due to strong demand. "You would not have imagined that an airline stock would be in the market in these times, yet alone increasing the deal size by 50%," said a banker working on the deal. The result of the issue, including allocation, will be known before the markets open in Sydney today (Friday). Qantas stock closed on Wednesday trading at A$3.24 and the initial A$300m new share offer was in the market with an indicated range of A$2.90 to A$3.10.