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Nowhere is the world's oldest profession more legal than in the Netherlands where the booming sex industry pays tax, but prostitutes say they still struggle to gain the financial acceptance they need from Dutch banks. According to Reuters, Amsterdam's ladies of the night consider themselves small business entrepreneurs, and want bank accounts which show their income is not personal so that expenses like condoms and sex toys can be tax-deductible. A complaint against ING Group with the Office of Fair Treatment, claiming sexual discrimination. ING claims it's policy has never been to do business with any persons from the sex industry, as this might offend other clients in the 65 countries it operates, which might not be as liberal as the Dutch.

Richard Litchfield, portfolio manager with Allmerica Asset Management, says the firm will rotate 5%, or $50 million, of its portfolio from mortgage-backed securities (MBS) into Treasuries if the Federal Reserve cuts rates by only 25 basis points this week, which is what he anticipates. Such a small cut by the Fed means the market will continue to demand another cut in September, leading to a second refinancing wave and causing mortgages to underperform.

Bank of Oklahoma Financial Corporation, the holding company that includes the Bank's funds from Oklahoma and several other states, is considering selling $200-300 million worth of 15-year, 6.5% Fannie Mae or Freddie Mac collateralized mortgage obligation bonds in order to buy similar 5.5% CMO paper. Lee Allen, portfolio manager of $3.1 billion in taxable fixed-income, says he is concerned the low-interest-rate environment will lead to a rise in prepayments. He said if the 10-year Treasury yield stayed below 5% for the next few weeks, or if the Federal Reserve cut rates by 50 basis points this Tuesday, he would take the plunge. Last Thursday, the 10-year Treasury was yielding 4.95%. Allen uses three-year PAC CMOs as a benchmark, and says his duration is roughly 3.0 years.

Standard & Poor's will release the first ever collateralized loan obligation performance index to the market next week, just ahead of a similar index to be offered by Moody's Investors Service. Both agencies are launching indexes in an effort to respond to investor demand for more transparency on deals and information comparing asset managers. The move, according to Stephen Anderberg, S&P ratings specialist, is an extension of the collateralized bond obligation index S&P already offers investors. "You're never going to have a liquid secondary market if you can't look at a deal before you invest in it," he said. Noel Kirnon, group managing director of derivatives and CMBS at Moody's, said his agency will be offering both a CBO and CLO index in the near future to compete with the S&P indexes. "We will launch our [CLO] index in a short time and it will be more comprehensive because our coverage is greater as we rate more deals," he said.

Scotia Capital, the securities arm of The Bank Of Nova Scotia, has hired former Nomura Securities International repo trading chief Keith McCluskey to build a repo trading operation in U.S. Treasury bonds. McCluskey, who will be based in New York, will report to Frank Pinon, the firms' funding and debt-markets trading chief. Pinon was unavailable for comment. McCluskey notes that although he joined the firm in mid-July, "we're just getting going now, in terms of building desk infrastructure and trading relationships."

J.P. Morgan's $400 million term loan "B" for Land O' Lakes is moving slowly, as some investors are expressing concerns over the co-operative nature of the business and what that would mean in a default scenario. There are also issues relating to the poor historical performance of the target company Purina Mills, which has filed for Chapter 11. Purina announced last week that the Securities and Exchange Commission is investigating whether traders illegally profited from Land O' Lakes proposed $360 million acquisition of St. Louis-based Purina.

Suiza Foods' $1 billion "B" term loan, which broke into the market last month, is showing its first signs of decline after holding steady at 100 1/2. The paper dropped slightly to 100 3/8 in a handful of $5 million trades, dealers said. Buyers and sellers could not be determined. Meanwhile, Dresser Equipment, another strong new credit, started to creep up.

Citizens Communications is preparing to refinance $2 billion in loans between now and October when existing lines mature. Don Armour, v.p., finance and treasurer for Citizens, said the new revolver would most likely be a multi-year backstop with the same institutions that led a $5.7 billion line arranged last year. Chase Manhattan Bank was the lead arranger on that credit, which has been downsized after a $1.7 billion note sale earlier this year and will be cut even more by a planned $1.75 billion private offering of 144A senior notes. The company is coming in with a $2 billion deal because it does not need a revolver as large as the existing facility.

Valero Energy will issue close to $1.5 billion in debt early next year to finance its acquisition of Ultramar Diamond Shamrock Corporation, according to Lee Bailey, v.p. investor relations. Valero thus becomes the latest in a lengthy list of investment-grade energy companies that have announced plans to raise capital via debt offerings to finance acquisitions. Analysts on the buy- and sell-sides say some $8 billion will come to market in the next six months, the largest surge in issuance for a six-month period in roughly four years, according to Mark Pibl, analyst at Barclays Capital. However, Pibl and Paul Tice, an analyst at Deutsche Banc Alex. Brown, say the market will have no trouble digesting the new issuance.

Another healthy week for issuance, with over $14 billion in investment grade, high yield and emerging markets debt coming to market. Highlights of the week included the $1.75 billion three-tranche deal for Citizens Communication, a $1.5 billion transaction for the Williams Companies and deals from several utilities including PPL ($800 million), Appalachian Power ($125 million), Wisconsin Public Service ($150 million), and Michigan Consolidated Gas ($200 million). The week also included a relatively healthy high yield calendar ($1.8 billion) a tap of the Colombia '20s for $325 million and many convertible deals (not included in the statistics below), of which Nortel was the most interesting following on the heals of Lucent's offering. Most of the deals on the week were smaller in size, with the average deal size dropping to below $400 million for only the fourth time this year. Weighted average credit quality was stable at BBB+.

Bank of America's portfolio-pruning mode kicked into high gear last week as the bank sold more than $200 million in asbestos-related names. B of A has been busy reducing the number of names in its portfolio, but dealers said last week the big lender was particularly active. The bank reportedly sold a $50 million piece of Federal-Mogul to kick off the week at a level in the high 50s and then continued unloading with a $70 million piece of W.R. Grace; $85 million of Owens Corning in the mid-60s; and $70 million of USG at a level of about 70. The levels on those names moved up with the trades. Peter Santry, managing director and head of distressed trading for Bank of America, declined to comment. Buyers of the paper could not be determined by press time.

Blackwood, N.J.-based A.C. Moore Arts & Crafts has closed a new $50 million revolver, doubling the capacity of the previous loan. Leslie Gordon, cfo, said the existing facility was set to mature in April 2002 and this coincided with plans to increase the size of the company and the opening of new stores. Key Bank, the existing lead arranger, was retained and First Union National Bank was added to the lending group, he said.