Search results for

High-yield and corporate credit market analysts expect spreads to narrow significantly by early next year, if not sooner. John Lonski, chief economist at Moody's Investors Service, says high-yield spreads could contract by as much as 100 basis points by early 2002. Lonski notes that corporate borrowing costs are extremely low. Three-month LIBOR, he says, is at its lowest point since February 1994, and is down 3% from a year earlier--the steepest year-over-year decline since 1992. He also expects issuance to decline as companies become more cautious in their use of leverage. These factors, he says, point to a decline in the ratio of downgrades to upgrades, and a narrowing of yield spreads.

Credit Suisse First Boston and J.P. Morgan Chase have been selected as joint lead arrangers for a loan backing Troy, Michigan-based Collins & Aikman Products Company's acquisition of Textron Automotive Company's trim division and refinancing of existing debt. A spokesman for Collins & Aikman said that approximately $1 billion of debt will be used to finance the $1.34 billion transaction, but he declined to comment on how the company will structure it between bonds and bank debt. CSFB, J.P. Morgan, Deutsche Bank and Merrill Lynch will be the banks involved, he said. The banks chosen for the financing advised on the transaction, the spokesman said. Calls to officials at the banks were not returned.

Credit Suisse First Boston is in the market with a $420 million refinancing for Addison, Texas-based beauty products seller Mary Kay launched on Wednesday. The debt consists of a $100 million, five-year revolver priced at LIBOR plus 31/ 4% with a commitment fee of 1/2%. There is also a $55 million, two-year asset-sale term loan priced at LIBOR plus 33/ 4% and a $265 million six-year term loan "B" with an outof-the-box spread of 33/ 4% over LIBOR. The new loan replaces a $515 million credit arranged in 1997, led by CSFB. Calls to officials at CSFB were not returned and pricing on the old line could not be ascertained. David Holl, cfo, was travelling and could also not be reached.

Deutsche Bank has hiredSteve Weinreich as an associate in its collateralized debt obligation distribution area in New York. Weinreich moves joins from Morgan Stanley, where he was a CDO research analyst. Michael Herzig, CDO distribution head and Weinreich's new boss, said Weinreich's job will consist of supporting sales for institutional clients in the U.S. and globally. "We have already closed seven [CDO] transactions this year and Weinreich's position was created to provide extra support in our post-closing efforts," says Herzig.

Aimee Evans has joined Société Générale's sales desk, starting last Wednesday, according to sources. Evans previously worked as v.p. loan syndications at Summit Bank. The bank was recently acquired by FleetBoston Financial and the department Evans worked for was let go with the merger, according to sources. Officials at Société Générale declined to comment, but a spokesman confirmed that Evans started last week and reports to Bob Barmore, managing director and head of loan sales. He declined to comment, while Evans could not be reached.

Jim Kochan, R.W. Baird's fixed-income strategist since 1991, has left the firm to join Strong Capital Management in Milwaukee in the new position of senior v.p. in the client services group. Kochan will be responsible for developing investment strategies for the firms fixed-income customers. He will report to Larry Zuntz, group chief, who is based in Chicago. Strong Capital Management has approximately $50 billion under fixed-income management. Prior to his tenure at R.W. Baird, Kochan was Merrill Lynch's chief fixed-income strategist, and was the first bond strategist picked for the Institutional Investor fixed-income research all-star team in 1989.

Salomon Smith Barney is prepping its third trust-preferred capital securities collateralized debt obligation deal for October according to Street syndicate officials. Pricing should take place in late October with the deal closing in early November, they say. The targeted size for the deal is $500 million. TRUPS CDOs are backed by a pool of securities issued by U.S. commercial banks at the holding company level, and were initially structured and brought to market by SSB in September 2000.

Trust Company of the West is in the process of buying a first portion of the collateral for its own TCW Global Project Fund, says Art Carlson, portfolio manager with a Los Angeles division of TCW, the asset manager that created and closed this CDO June 27. Carlson mentions that his firm plans on buying $75 million of the collateral between now and December. The total CDO size is slated to be $500 million.

The dust appears to have settled on Washington Group's debt, as the recent plummet of levels has reversed to a positive trend. Meanwhile, dealers note increasing comfort surrounding the company's financial issues and confidence that its core business--construction--is in demand and profitable. Dealers reported a series of small trades in the 82-83 context early last week. The Boise, Id.-based company is one of the country's largest construction and engineering firms. Calls to Washington Group were referred to a spokeswoman, who said the company plans to pull out of Chapter 11 in the fall.

Kansas City, Mo.-based American Italian Pasta switched from Deutsche Bank to Bank of America for a new $300 million, five-year revolver backing the acquisition of seven pasta brands from Borden Foods. Wendy Coffey, director of investor relations, said "B of A is the number one syndicator out there. Deutsche Bank is closer to number ten. We knew that B of A could get the job done and they did." A spokesman for Deutsche Bank rejoined, "in arranger league tables Deutsche Bank is between four and six placed on any given day and Bank of America is third."

The "B" paper for American Tower hit 99 1/4 in a $10 million trade last week, improving on the 98 3/4 bid on the name. Dealers have been divided on whether tower credits seem to tumble with the telecom sector. Some have said towers follow--albeit sometimes months behind--downgrades in levels on telecom credits. Still, overall tower credits have remained fairly resilient in a rocky market. Calls to the company were not returned.

Arch Wireless' bank debt continues to fall on sector problems, last week sliding to 23 from 26. Dealers reported a series of small trades last week. No buyers and sellers could be determined, but one trader said "a lot of desks have an axe in it." The paper plummeted 20 points in late July after the company announced it may default on its credit facility (LMW, 7/29). Dealers continue to note a sagging paging industry. "The pager is an item people can do without. With cell phones it's not really necessary," said a dealer.