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Salomon Smith Barney,Bank of America,J.P. Morgan and First Union co-led and launched two separate deals last week for FPL Group Capital and its subsidiary Florida Power & Light. The Salomon and B of A deal for FPL Group Capital is $2 billion. J.P. Morgan and First Union's deal for the subsidiary is $1 billion, according to a market source. Each is divided into 364-day and three-year pieces, she said. Pricing on the $2 billion loan is LIBOR plus 25 basis points with a step-up by 10 basis points each time if 33% and 66% of the loan is drawn, she explained. Commitment fees are 8 to 12.5 basis points and the facility fees are 8 basis points on the 364-day and 10 basis points on the three-year lines.

Eric Green, a portfolio manager at Penn Capital Management, has recently been adding to his position in Pegasus Communications on the view that Pegasus is an excellent yield play and a likely takeover candidate. Green has been buying the zero coupon notes of '07 (Caa1/CCC+) because they offer considerably more yield than comparable cash pay paper, and he believes the principal will be paid off when the bonds mature. Last week, the zeros traded at 58, giving it a current yield of 18.14%, while 9.625% senior notes of '05 (B3/CCC+) traded at 92, giving them a yield-to-worst of 12.14%.

Real estate mogul Marvin Davis'Davis Cos. has tapped Fleet Securities to provide a $170 million acquisition loan to fund the Los Angeles-based real estate company's acquisition of 181 West Madison Street, a prime office property in downtown Chicago. The trophy was purchased last month from Yasuda Trust for $234 million, or about $250 per square foot.

Lehman Brothers' $300 million, six-year term loan "B" for Tesoro Petroleum raced to $100 million in commitments within a day of launch on Sept. 5 as investors cited the attractiveness of the company and sector, as crack spreads continue to show healthy margins. The crack spread is the synthetic measure of margin for the oil refining industry that compares the difference between heating oil and crude oil, as well as between gasoline and crude oil. Historically, the sector has been less hot, said a banker, though throughout the year spreads have been good.

Top ranked high-yield paper and forest products analysts are divided over whether falling commodity prices will drive down the price of bonds and create an opportunity for investors to swap into lower-rated names for additional yield. Bill Hoffmann, an analyst at UBS Warburg and a second-teamer on Institutional Investor's 2001 All-America Fixed-Income Research Team, says weak commodity prices could eventually drive down high-priced credits such as Riverwood International senior subordinated notes (Caa1/CCC+) and Caraustar Industries (Ba1/BB-). This will create an opportunity for investors to swap out of higher-rated names, such as Tembec (Ba1/BB+), Norampac (Ba2/BB) and Smurfit-Stone Container (B2/B).

United Defense Industries secured an $800 million credit facility on Aug. 13 to replace its $200 million in high-yield subordinated debt. "We replaced our sub debt with all bank debt for a lower interest rate," said Francis "Buzz" Raborn, cfo. The company had prepaid a $707 million bank deal late last June. He says the new financing was oversubscribed to $850 million, but the company chose to cut back. "We didn't need the extra money," Raborn said. The Arlington, Va.-based company manufactures armored combat vehicles and naval systems. United Defense replaced the bond debt with bank debt because it's less expensive, more flexible, and the overall rates are lower, said Raborn.

Emerging market sovereigns are among the most frequent issuers in the Samurai market: Brazil has led the way and tops the Samurai issuer league table for 2001 to date. But in second place is Deutsche Telekom, demonstrating the new mix of issuers seeking to access the Samurai market. European corporates have begun to launch debut issues, following the success which US corporates such as IBM have had in raising funds from Japanese investors. Richard Morrow surveys the variety of deals brought to the market this year.

Amid the coverage of sluggish domestic issuance and prolonged economic gloom in Japan, there is one feelgood story in Tokyo: the continued strength of the Samurai bond market, which has regained the support of heavyweight offshore issuers. Apart from a stutter in confidence in the first quarter of this year, the demand from Japan's investors for the yield that Samurai bonds can offer is growing. Richard Morrow reports.

The Samurai bond market is not the only market that foreign companies have sought to take advantage of to raise yen financing. Many international corporates have looked to either Euroyen issues, which exclude US investor participation, or global yen bond issues as well. In total, public Euroyen issuance has reached about ¥3tr this year, well above the total for Samurai bond issuance.

Bulent Osman, head of the U.S. dollar interest-rate options desk at J.P. Morgan in New York, has been made redundant. An official familiar with the departure said Osman was let go as part of the firm's efforts to cut costs. Osman could not be reached for comment. Sara Strang, head of Bermudan options in New York, has been promoted to fill Osman's position. She confirmed her appointment and said the two positions have been merged, but declined to comment further.