Search results for

Missouri Valley Partners is seeking to resume an asset reallocation from corporates to mortgage-backed securities that was interrupted by attacks on the World Trade Center. Steven Jones, portfolio manager of some $200 million, says the St. Louis shop shifted to an overweight position in MBS from a neutral position, and from overweight to neutral in corporates, just prior to Sept. 11. Jones says the fund will consider swapping a total of an additional $10 million in two- to three-year bonds of Heller Financial, which will soon be acquired by General Electric (Aaa/AAA), Banc One and Merrill Lynch into similar duration MBS paper if spreads return to pre-Sept. 11 levels.

Nelson Capital Management plans to swap 5% of its portfolio, or $10 million, from Treasuries into agencies. Melissa Parker, portfolio manager with the Palo Alto, Calif.-based investment firm, says she is doing this because agency debentures spreads have recently tightened as a result of the market-wide flight to quality induced by the terrorist attacks. As an example, Parker says five-year Fannie Mae debentures were yielding 68 basis points over the five-year Treasury on Sept. 10: last Monday, the spread over Treasuries tightened to 54 basis points.

Bayer AG plans to raise up to €5.35 billion via an offering of bonds within the next year to finance its acquisition of Aventis SA CropScience. Karl-Heinz Kleedoerfer, a senior corporate finance executive at Bayer, says the company is negotiating with a short list of banks to arrange bridge financing for the acquisition. Bayer will then take out the bridge loan by issuing bonds, and possibly commercial paper, within the next year. The eventual bond issue will be led by the bank that extends the bridge loan, though Kleedoerfer would not say with which banks Bayer is talking.

Deutsche Asset Management, which manages a total of €24 billion in European fixed-income assets, is looking at increasing its exposure to European corporate credits. Keith Patton, London-based portfolio manager, says the firm is long duration on government bonds and maintains a neutral weighting to corporate debt, but would like to increase that allocation. "Given [that] the outlook is extremely positive for the long end [of the government yield curve], however, the current climate of risk aversion and slow-down in growth has meant forecasting the long end has been a difficult process," said Patton. The firm is concentrated in the seven- to eight-year portion of the government yield curve.

SunTrust Bank's deal for U.S. Xpress Enterprises has had its deadline extended as investor uncertainty over committing to new deals hampers the pace of syndication.

Jones Lang LaSalle has increased its original $250 million credit by $25 million for working capital, investments, and day-to-day operations. The original deal expired in October 2002 and, with the refinancing, debt maturity is extended two years. Brian Hake, treasurer, said the company wanted to refinance early. "We didn't want the debt to become a short-term liability. We wanted to have something in place and not have to make a run on it next year," he said. Jones Lang LaSalle, based in Chicago, is an investment management firm.

J.P Morgan is looking to syndicate a $675 million debtor-in-possession facility for Federal-Mogul after the company filed for Chapter 11 restructuring and administration under the United Kingdom Insolvency Act. Leigh Pierce, spokeswoman for J.P. Morgan, said a bank meeting is planned in the next couple of weeks, though pricing and an exact date have not yet been determined. Jim Fisher, spokesman for the auto-parts company, said the DIP facility is a global facility, though he could not name any other banks leading the deal. No specific timeframe has been set for the company to emerge from Chapter 11. "It will be years rather than months," noted Fisher. The aim of filing is to structure payments for claimants resulting from asbestos litigation.

J.P. Morgan's drawn out, reworked and buttered up deal for Land O'Lakes was wrapping up as LMW went to press last week. A buysider said J.P Morgan was looking to close the credit last Friday. The deal was originally launched in July amidst a slew of successful food deals, but it did not fly. A reworked structure with call protection and richer pricing got the deal rolling, the investor said. Leigh Pierce, spokeswoman for J.P. Morgan, declined comment and Lydia Botham, spokeswoman for Land O'Lakes did not return calls.

The Loan Syndications & Trading Association is pushing to close the window of opportunity to back out of trades by binding parties to terms of their trade from the moment they reach agreement, including phone conversations. Currently, the loan trading market relies on oral agreements over the phone that are still open until documents are signed. Jane Summers, legal counsel for the LSTA, said the LSTA is taking aim at the period of time between when traders say "done" on the phone and when written confirmation is faxed back and forth. "That's the period we're trying to address with this change. We have begun a dedicated legislative effort in New York State to have the loophole closed in the statute," said Summers.

Irving, Texas-based Magnum Hunter Resources has added three financial institutions to its senior bank facility and increased the borrowing base by $35 million to $160 million. Michael McInerney, v.p., of corporate development, said the increase in the borrowing base was made possible by two factors: A $31.3 million acquisition of oil and gas properties in New Mexico that act as collateral; and the addition of the three new institutions, Credit Agricole Indousez, ABB Energy Capital and Hibernia National Bank. It is better to expand the base rather than upsize the $225 million three-year revolver, said McInerney, as the facility is still essentially the same, he noted. Magnum Hunter is an independent exploration and production company of gas and crude oil.

Moody's Investors Service downgraded the debt rating of Finlay Enterprises to Ba3 from Ba2 resulting from lowered expectations for department stores sales and particularly for discretionary purchases such as fashion and gift jewelry, in the aftermath of the Sept. 11 attack. Approximately $500 million of debt securities are affected. Finlay Enterprises, headquartered in New York City, is the largest operator of leased jewelry departments in the U.S. Calls to Bruce Zurlnick, cfo, were not returned. A spokesman declined to comment. A stable outlook is expected, however, supported by the strength of Finlay's host relationships, and the flexibility inherent in its cost structure.

The par market lost footing last week, with overall levels dropping 1/2 to one point. Dealers were left sifting through the names and distinguishing which credits had dropped on fundamental issues and which were just weighed down on heavy unloading of the paper. Cable and telecommunications names that had traded at strong levels before the Sept. 11 attacks are expected to find their way back up, but hotel credits are said to be dropping on concerns about their performance.