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About $12.5 billion of investment grade debt (including split rated BBB/BBs) came to market in the week ended October 11. Once again, the deals were split: Higher quality credits (including banks, the Province of Ontario and Wal-Mart) took advantage of the steep yield curve to issue at low all-in yields at the front end of the curve. Aa2/AA Wal-Mart, for example, issued 2Y debt with a 3 _% coupon. Down the credit spectrum, issuers were happy to extend out to 10+ years to take advantage of low spreads. Almost $7 billion in BBB and split-rated paper came to market, once again heavily weighted toward the utility and energy sectors.

Ackerley Group's 9% of '09 (formerly B3/CCC+) zoomed from an 82 bid to 103, following an acquisition announcement by Clear Channel (Baa3/BBB-). Ackerley is a billboard advertiser and owner of television and radio stations. "The purchase shows that even in a tough environment, there appears to be some market for TV assets," says Andy Van Houten, media analyst and co-head of high-yield research at Deutsche Banc Alex. Brown. Nonetheless, Deutsche Banc maintains its underweight recommendation for high-yield television bonds.

Goldman Sachs, Merrill Lynch, Morgan Stanley and Lehman Brothers, have all signed up as retail participants in a $425 million two-year term loan for AES. Power sector financiers say it highly unusual to see so many bulge bracket firms sign up to a single loan facility.

The average size of trades has been shrinking, pushing the thorny issue of assignment fees to the fore. These standard $3,500 payments to the administrative agent on a loan when it is traded are cutting into the upside for desks. "When you were doing $20 million trades, it didn't matter," said Jon Weiss, head par trader at Bear Stearns. "But on a $2 million trade, it does."

Bear Stearns is seeking to pick up key bankers with transaction and customer relationship experience for its London-based origination desk, according to Noel Dunn, senior managing director for debt corporate finance. Dunn says there are roughly 10 bankers on the desk, while noting that, "We have more hiring to do and the current market makes for a terrific opportunity to hire good people."

Merrill Lynch and Morgan Stanley are leading a $1.9 billion financing package for Burlington Resources' acquisition of Canadian Hunter Exploration, parlaying advisory roles they won quietly when Burlington went straight to them in hopes of minimizing potential leaks of the deal. Dan Hawk, v.p., treasurer, said the company turned to Morgan Stanley for a mixture of relationship and understanding of the business and to Merrill because of its understanding and expertise in the Canadian sector.

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.