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Moody's Investors Service lowered the senior unsecured debt ratings of Reston, Va.-based competitive local exchange carrier XO Communications to Caa1 from B2 reflecting XO's performance to date and the company's revised guidance of expected future performance. The rating downgrade affects $800 million in credit facilities. Furthermore, Moody's has a negative outlook based on a belief that XO will be constrained in its ability to cover its future funding gap on acceptable terms from public debt and equity markets. Additionally, XO's revised business model may still be impacted by the general economic slowdown.

Palo Alto, Calif.-based CNF, watching the game of banking mergers and musical chairs, chose Bank of America to lead a new five-year revolving credit facility because of the personnel still in place at the bank. The B of A deal replaces one led by J.P. Morgan. "The banking community has changed considerably in the last five years," said Marc Thickpenny, v.p. and treasurer. "J.P. Morgan no longer exists as the same bank and so the top four or five lenders on the credit were asked to pitch for the new lead. Despite the mergers the people at B of A are the same people as four or five years ago. We also looked at who had provided the most credit over the years and B of A have done that." Since J.P. Morgan merged with Chase Manhattan Bank, the people and institution are very different, he said.

Credit Suisse First Boston has launched retail syndication of the $822 million credit for PSEG Power, just as the bank wraps up syndication of the heavily cut Mirant deal, which closed last week. The PSEG loan consists of an $800 million four-year construction facility priced at 1 3/8% over LIBOR. Commitment fees are 3/8%. There is also a one-year $22 million letter of credit priced at LIBOR plus 7/8% with a 15 basis points commitment fee.

Richmond, Va.-based AMF Bowling Worldwide has received a $75 million debtor-in-possession financing from five lenders as it wrestles with repaying $625 million in debt. Merrell Wreden, v.p., investor relations, said "the company is past the point of equity or note issuance," explaining why the firm chose the DIP option. Citibank, Royal Bank of Scotland, Foothill Capital, SSF Investments and Farallon Capital Group have stepped up for the facility.

Some cable/media analysts say Comcast's bid for AT&T's cable business last week is a strong move for Comcast, which they feel is a well-managed company with lots of experience running cable operations. Comcast's 6.74% notes of '11 widened 10-15 basis points on news of the bid, and the analysts say investors should buy Comcast paper on that weakness.

Barclays Capital has hired Mark Pibl, Institutional Investor's top-ranked energy analyst last year, from Merrill Lynch, to lead U.S. investment grade research. The hire is the latest stage in Barclays' effort to build up its U.S. credit business, according to John Stathis, managing director and head of global market sales. He says Pibl will now lead a search for additional talent in the financial, utility, and industrial sectors (BW, 6/18). Pibl, who is expected to start today, fills a position vacant since the departure of Shawn Burke earlier this year.

Mike Hyland has taken over as head of high-yield research at Bear Stearns, according to BW sister publication TeleTech Financing Week. Hyland, who joins from Invesco Funds, is taking over for Paul Greenberg, who announced his resignation about two weeks ago (BW, 7/2). Greenberg left the firm to start a hedge fund. Hyland will report to Warren Spector, the head of Bear Stearn's fixed-income division. Calls to Spector and Hyland were not returned at press time. A spokeswoman for Invesco did not return calls at press time.

Morgan Stanley and Bank of America's $150 million revolver for Vanguard Health Systems got off to a flying start last week, with UBS Warburg and Credit Suisse First Boston signing on as participants. A banker familiar with the credit said two more banks are close to committing with more than half the amount in the bag. The meeting was held on June 11. The interested banks could not be ascertained. Pricing on the credit is 3% over LIBOR to the end of the year, with a grid based on leverage adopted thereafter. Vanguard is also issuing $200 million in senior subordinated notes in order to refinance existing debt of the company and for general corporate purposes.

Italy's IntesaBCI plans to become a market maker in weather derivatives as part of an expansion into high-margin capital market products. Richard Turrin, director of structured products in New York, said it is setting up the department as part of a wider expansion into alternative investments, structured reinsurance products and tax derivatives.

Italian investment bank MPS Finance is pricing a EUR352 million (USD300 million) hybrid collaterialized debt obligation referenced partly to banca poploare di spoleto's loan portfolio. Giacomo Corsini, head of sales at MPS Finance in Siena, said spoleto's loan portfolio was diversified using credit default swaps to make it more attractive to investors and now 46% of it consists of credit default swaps. He added the 10-year deal will hit the market Monday.

BNP Paribas Asset Management plans to launch several funds on baskets of hedge funds over the next two years and set up between 5-10 hedge funds covering everything from weather derivatives to merger arbitrage.Jean Dominjon, global head of alternative and quantitative asset management in London, said the move is part of a plan to quadruple assets under management in alternative investments over the next five years to EUR40 billion (USD33.9 billion). Most of the funds will use OTC derivatives, he added.

ABN AMRO is in the market to hire credit derivatives professionals to replace Fabrice Haddad, a credit derivatives trader who recently joined Gen Re Securities in London, and as a response to increased customer flows. Graham Bird, managing director and global head of derivatives at ABN AMRO in London, said the firm's plain-vanilla and structured credit trading business has grown as more end-users and investors have come into the market.