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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.

Analysts are far from a consensus on whether the debt of embattled telecommunications equipment manufacturer Marconi is a buy or a sell. The only point analysts do agree on is that the company's dim picture should be a bit clearer when it releases an earnings statement today. At 30 cents on the dollar, Ziki Salav, a credit analyst at Dresdner Kleinwort Wasserstein in New York, called Marconi (BBB-) a buy, because the company's creditors are in such a bad position that it should be relatively easy to renegotiate its credit agreements. "The banks are in a bad position. The company pays LIBOR plus 40 basis points and there are no covenants in the agreement. It should be easy for the company to extend the maturity of its credit facility to '05 by giving the banks seniority," he added.

Nextel Communications' bank debt was offered at 84 5/8 last week, but there were no takers. Dealers faulted a limited number of buyers and a shaky market for Nextel's continued softening. They noted that based on fundamentals, the credit should be trading higher. "The bonds are up and the company has just announced deals for better capacity," said a trader. "But the credit is by no means bullet proof." He added that stressed players may be waiting for a better yield before they move in on the paper. Distressed dealers added that there's still too much uncertainty in the market to jump in on Nextel right now. Nextel is a telecommunications company based in Reston, Va. Calls to Paul Selah, cfo, were referred to Paul Blalock, head of investor relations, who declined to comment.

Pacific Investment Management Company has added two senior portfolio managers to its European team in an effort to gain more mandates for its European products and to compete for more third-party business. Joe McDevitt, executive v.p. and head of PIMCO's London office, said, "We're trying to become more of a core manager in the European fixed-income market. Clients tended to see us as a global, U.S., investment-grade and high-yield manager." PIMCO has roughly $7.5 billion in U.S. core bond and specialty mandates under management for European clients, said McDevitt.

Sioux City, Iowa-based Terra Industries extended and reduced its revolving credit facility and took the honor of being the first high-yield issuer of notes to re-enter the market last week. Francis Meyer, cfo, said the existing $225 million asset-based facility has been reduced to $175 million and extended from its maturity date of 2003 to 2005. Citibank led the old and restated facility as well as the planned $200 million senior secured notes issuance, stated Meyer. Pricing on the credit is LIBOR plus 23/ 4% with $69 million expected to be drawn on the revolver.

Washington Group's term loan traded at 63-64 last week while the revolver hit 73-75. Levels on the revolver were 82-83 last summer (LMW, 8/12). An estimated $10 million changed hands. At the time dealers noted increasing comfort with the credit in light of a stronger construction industry. But a softer market overall may be hitting Washington Group again. The Boise, Idaho-based company is one of the country's largest construction firms.