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The high-yield team at OppenheimerFunds has been swapping out of traditional cash pay bonds in the cable and telecom sector, and buying zero coupon bonds. Portfolio manager Tom Reedy, manager of $7 billion, says that several zeros in this area are currently trading at deep discounts, and he has been putting on this swap trade in names including Crown Castle International (B3/B), NTL (B3/B-), and Telewest Communications (B2/B).

UBS Warburg and Bank of America are hitting the market with a five-year, $6 billion term loan backing Devon Energy's purchase of Calgary-based independent senior oil and natural gas producer Anderson Exploration. The price of the Anderson purchase is $4.6 billion, but the financing package also covers the cash portion of the acquisition of Mitchell Energy & Development, announced last month. Retail syndication of the deal will launch in mid-October. The co-leads started approaching close relationship banks Friday.

Wyndham International's term loan "B" traded up to 99 1/8, while the increasing rate loan (IRL) traded at 991/ 4 last week. The "B" was at 97 a day before the trade, while the IRL was at 98. Some dealers are confused over an uptick in levels that's based on market speculation. For a while the market chattered about a possible takeover by Bass Hotels, but no confirmation has been released. "I think it may just seem more concrete to people," said a trader. The hotel operator is based in Dallas.

An estimated $50 million of Xerox Corporation's bank debt changed hands last week at 85-86, continuing an upward march. The two desks said to be the most active in the name are J.P. Morgan and Deutsche Bank, but officials at both shops declined to confirm rumored trades. The paper traded at 82 to 831/ 2 two weeks ago, and the consistent upticks in the debt's levels--and heavy trading as it moves up--mark a notable turnaround for a company that was getting hammered less than a year ago. Dealers said the levels are partly a reflection of a company that has done everything from asset sales to new product offerings to improve business. Calls to Barry Romeril, cfo, were not returned.

Amroc Investments closed down Tuesday after a 10-year run, as founder Marc Lasry said he wants to focus on his other business, Avenue Asset Management. "It was a matter of allocation of time," he said. "[Shutting down Amroc] allows me to manage more capital." Lasry said the "bittersweet and gut-wrenching" decision to shut down the distressed debt brokerage came a little more than a week ago.

Market players expect growth in synthetic arbitrage structures to bypass the default risk and the need for equity investors associated with traditional cash flow collateralized debt obligations. Typical cash flow deals contain an equity component of 12%, but commitments of that size have been difficult to come by. Additionally, rising default rates have hammered many traditional collateralized debt obligation structures. A synthetic piece in a deal allows managers to dodge those bullets by either reducing required equity or providing credit protection on collateral.

Appetite for Suiza Foods' bank debt continues as "B" paper traded in the 1003/ 4 range last week. Dealers noted that Suiza is buying Dean Foods, which carries some acquisition risk. "Small-scale grocers have gone bankrupt after making an acquisition, but Suiza has done well at making successful integration," said a trader. Dealers noted that the food industry remains one of the most stable, and in a market wary of telecom, Suiza is especially appetizing. The dairy company is based in Dallas.

Moody's Investors Service has downgraded the bank-debt ratings of Levi Strauss & Co from Ba2 to Ba3, affecting $2.2 billion of debt, citing the continued erosion of the Levi's brand name. Despite denim being in a positive fashion cycle, sales continue to fall and there is a risk of further decline due to a perceived inability to maintain market relevance to a demographically diverse clientele, according to Moody's. The downgrade also reflects a higher than planned inventory level and low likelihood of meaningful reduction in the near term. The rating outlook is negative and if the company cannot fully address its design, sourcing, and inventory and supply management issues within the next year, it may face continued declines. Weaker cash generation could create liquidity risk due to scheduled bank amortizations and refinancing needs in 2003.

Morgan Stanley has hired Drew Hanson to lead its high-yield telecom research effort, according to Bill Reiland, head of high-yield research at Morgan Stanley. Hanson, a runner-up on the Institutional Investor 2001 All-America Fixed-Income Research Team while at Credit Suisse First Boston, is the first of several additions Reiland will be making in an effort to add experience and prestige to the firm's high-yield research effort.

Nextel Communications hit 92 in a series of two $5 million trades last week. Levels have waffled in the 92-93 range for the past two weeks, topping off at 933/ 4 most recently (LMW, 9/2). With the heavy activity in the name, dealers say it's hard to pinpoint why Nextel's debt trades on a certain week. "Just more buyers coming in and exposure management," said one. "As the stock market slides, Nextel may come down a bit." The telecommunications company is based in Reston, Va. Calls to Timothy Donahue, cfo, were referred to a spokeswoman, Karen Fay, who did not return calls.

Bear Stearns has hired asset-backed securities trading veteran Chris Connors to do institutional sales/trading for its ABS secondary desk in New York. His first day was last Wednesday. The position is a new one and, according to Connors, it has not yet been determined which sector he will trade, nor what his title would be. Bear Stearns fixed-income executives were uncertain as to whom Connors would directly report, and Tom Marano, the mortgage-backed securities trading floor manager, was unavailable for comment. Jeff Verschleiser, the firm's head of asset-backed trading, did not return a call seeking comment.

Premdor Inc.'s proposed $685 million senior secured bank credit facility has been assigned a Ba2 rating Moody's Investors Service because of risks associated with the company's merger with Masonite. According to Joseph Snider, v.p. and senior analyst at Moody's, integration issues are associated with any merger. "The two cultures can clash, management can clash, and the employees of the company that's being acquired can have no loyalty to the acquiring company," he said, explaining why the rating agency gave the company a Ba2 rating. He added that Premdor has made a number of smaller acquisitions, but that Masonite is its first major acquisition. Robert Tubbesing, cfo of Premdor, did not return calls for comment.