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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.

BNP Paribas launched last Friday a $300 million letter of credit facility for Aliso Viejo, Calif.-based Fluor, an engineering and construction company which designs, builds and staffs offices. The deal is split into a three-year, $200 million revolver and a $100 million 364-day facility. Pricing is off a ratings grid, with 55 basis points on an issued credit. Commitment fees for the three-year and 364-day facilities are 15 basis points and 12.5 basis points, respectively. The company carries an A3, A- rating. From BNP Paribas' viewpoint, a letter of credit facility as a standalone asset provides a good return, while the required capital put aside as a percentage of the credit is less than for a revolver, said a banker following the deal. The deal is considered well priced to the market and to existing facilities.

Bankers said Deutsche Bank is rumored to be providing a loan backing Prestige Brands International's acquisition of Procter & Gamble's Comet cleaning brands. Prestige bought Prell Shampoo from Cincinnati-based P&G, at the end of 1999. A banker familiar with the deal, said the price of Comet would be in the region of $70-100 million, adding, P&G is looking to divest itself of smaller non-core brands and concentrate on building the bigger brands, such as Febreze, Pampers and Pringles. Monica Collins, a spokeswoman for P&G, could not speculate on whether Comet has been sold, though she confirmed Goldman Sachs was hired in the summer to select bids for Comet. Timing of the launch of the loan and possible pricing could not be ascertained. Calls to officials at Prestige were referred to Elise Donahue, v.p., sales and marketing who did not return calls. Ted Meyer, spokesman at Deutsche Bank, did not return calls by press time.

Devon Energy is preparing to issue a $2-3 billion note offering, with both 10-year and 30-year tranches in the next several weeks, according to BW sister publication Loan Market Week. Larry Nichols, the president and ceo of Devon, says the proceeds will be used to finance the purchase of Calgary-based oil and natural gas producer Anderson Exploration. It is also part of a larger financing scheme involving a five-year $6 billion term loan, to finance the cash portion of the acquisition of Mitchell Energy & Development announced last month. Nichols says UBS Warburg and Banc Of America Securities will lead both the note offering and the loan.