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Investors question if lead arrangers Bear Stearns and Lehman Brothers will pull off the $225 million deal they launched two weeks ago for the buyout of pharmaceutical unit MedPointe, Inc. by Carlyle Group and Cypress Group. One buysider said roughly $100 million in commitments has come into the $150 million "B" tranche of the deal, but, she said, "it will be a stretch," for the banks to fund the remainder. Officials at Bear Stearns and Lehman Brothers did not return calls. Calls to Carlyle and Cypress were not returned by press time.

Extended Stay of America's bank debt is reportedly trading at 100 3/8 to 101 out of the box on appetite for a strong credit, say dealers. Dealers said the credit was riding high off a strong syndication, but there was no consensus on whether it would hold at its lofty levels. The Florida-based company provides apartment-style accommodations in a hotel atmosphere to business travelers. Greg Moxley, cfo, declined to comment.

ING Capital Advisors closed its first euro-denominated collateralized debt obligation in Europe and will be looking to do another in the next six months. "The institutional market is growing quickly, although it's starting from a very small base, and we wanted to be recognized as one of the first true CDO players in Europe," said Mike Campbell, portfolio manager.

Interstate Bakeries weathered a tough market last month, closing on $675 million in pro rata credit after carving out a $125 million add on institutional piece. Paul Yarick, treasurer, said the company was able to complete and oversubscribe the big pro rata deck of the deal despite a tough time in the market for most credits as the defensive profile of the food sector makes it more favored lately. "The transaction was put together by J.P. Morgan and they were able to get it done within the time frame," he noted. The deal was launched at the end of June. Originally the structure comprised a $300 million revolver, and a $500 million "A" term loan.

Standardization efforts and increased activity in the loan trading market are drawing nontraditional players to the arena. Smaller shops, mostly distressed debt specialists, are looking at the bank loan market as more clients ask for the product. "There's a lot of money flowing into the distressed market right now," said one big dealer. "There's perceived to be a lot of upside potential, since the market has supposedly bottomed out. Plus there's a lot of liquidity in it; the market isn't talking about a few credits. There's a lot of credits out there that people talk about."

Sun Healthcare's bank debt proved it also rises early last week, when the debt notched up to the 281/ 2 range after lagging in the low 20s for months. Traders couldn't pinpoint the exact reason behind the debt breaking through, but noted it was one of the credit's hardest hit by the health care slump. It was also among the slowest to recover when the market improved. Calls to the company were not returned by press time.

Another summer week, with corporate bond issuance sub $10 billion at $9.6 billion and the average deal size dropping $150 million to just $520 million. Despite the quiet tone, there were several notable deals, including a $575 million 10-year from Ba1/BBB- Dana, which priced at +395 bp over. The Dana deal, along with offerings from Humana, Pulte Homes and other low BBB borrowers indicates that the demand for crossover names is still strong as investors look to add yield to their books at historically wide borrowing levels. Higher quality borrowers continue to issue short-term to take advantage of low absolute yield levels as the 2Y Treasury hit its low for the year last week. The weighted average rating increase to A- for the week as larger deals from Citigroup and AIG SunAmerica skewed the average.

Bank debt for XO Communications notched up to 75 from 73 last week as the company bought back $500 million of its bonds through Citigroup. A bank spokesman declined to comment. XO, based in Reston, Va., is a competitive local exchange carrier. A spokeswoman did not return calls by press time.

Buysiders expect J.P. Morgan Chase to increase pricing on the $400 million term loan "B" of the $1.15 billion deal for Land O'Lakes as institutional players are balking at the LIBOR plus 2 1/2 % being offered. New pricing is expected to come in at LIBOR plus 3%. The market also expects the company to pull its plans to finance a $250 million bridge loan priced at LIBOR plus 2% as the company is now telling investors it will speed up its execution of a $300 million bond offering it planned for next year in the 144a market. "They know we like to see some [bonds] below us," commented one buysider on why the company has switched strategies mid-syndication. Calls to J.P. Morgan Chase and Land O'Lakes officials were not returned by press time.

Merrill Lynch launched a $250 million deal last week to finance the spin off Pitney Bowes Office Systems from parent Pitney Bowes. The deal comprises a fully underwritten $125 million revolver priced at LIBOR plus 2 1/4% and a $125 million term loan "B" priced at LIBOR plus 2 3/4%. Merrill, also advisor on the spin off, is offering 50 basis points on $15 million commitments to the revolver and 1/8% on commitments to the term loan. The deal is expected to be rated in the double B range by Standard & Poor's. The office systems business rents and leases fax machines.

Louisanna-Pacific has received $150 million in commitments on its $200 million pro rata bank deal since syndication launched two weeks ago. Bill Hebert, director of investor relations, said the company expects the remaining $50 million to come in before the end of the month along with the completion of a $200 million bond deal. To make the all-revolver deal more attractive to banks, Hebert said the company is simulataneously executing a bond deal through lead underwriter, Goldman Sachs. "Banks want to lessen exposure to this market [pro rata] so we had to go with a smaller revolver," explained Hebert, regarding the company's decision to replace its existing $370 million facility with $200 million in bank debt and $200 million in bonds.