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Lehman Brothers and Salomon Smith Barney are vying for dominance in the European fixed-income indexing market. Portfolio managers are encouraging clients to switch from government bond indices to more comprehensive indices, such as the Lehman Brothers Euro aggregate indices and the Salomon Smith Barney Euro big index, London-based managers and consultants say. "The preferred aggregate indices for European fixed-income appear to be becoming the Salomon and Lehman series. It is not yet clear which, if any, of these series will become the accepted market standard in the way that, for example, the Lehman aggregate has achieved dominance for U.S. broad market mandates," says Bob Collie, director of consultants at Frank Russell Company in London. Merrill Lynch, J.P. Morgan and Morgan Stanley also have index series, but Lehman and SSB's are the most widely used, the consultants say.

Easy come easy go. Austrian police arrested a 28-year-old man who robbed the Salzburg branch of Austrian savings bank Sparkasse where he was known as a customer. The APA news agency reported the Austrian man held up the bank at gunpoint Monday, escaping on foot with a haul of $20,070. After being identified as a customer by a bank employee, the man was detained by police at a late-night bar in Klagenfurt, where by the time of his arrest Tuesday, he had guzzled five bottles of champagne in the company of several bar hostesses. APA said the thief did not resist arrest.

Fixed-income portfolio managers say they are adding longer maturity corporates viewed as recession-resistant, in order to pick up additional yield. One New York-based firm has been swapping out of long Treasuries into bonds of companies such as Kroger, IBM, Tyco International, Qwest Communications andCoca Cola. A portfolio manager at the firm says that on a total return basis, long corporates declined 2.44% in September, while long Treasuries were up 0.23%. "We think this represents an opportunity," she says. She declines to mention specific issues at the which the firm is looking, but says they are all 30-year issues trading 10-20 basis points wider than where they were prior to Sept. 11.

Scott LaPorta, the cfo of Park Place Entertainment, strongly hinted to BondWeek last week that the company will play a role in restructuring Aladdin Gaming, a competitor which filed for Chapter 11 bankruptcy protection on Sept. 30. Such a move by Park Place, which owns one-third of Aladdin's outstanding bonds, could have a significant impact on their value. The $221.5 million zero coupon notes of '10 (Ca/CC), which were to go cash pay in 2003, fell from a range of 19-20 to 15 after the attacks. LaPorta declined comment on the reasoning behind why his company feels it can lead a turnaround for Aladdin. LaPorta says Park Place purchased the bonds because it considered them a good value even if Aladdin were to end up in Chapter 11. "We thought we could be helpful; what being helpful means remains to be seen," he says, adding only that investors should "stay tuned."

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.