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UBS Warburg is recommending customers buy euro/sterling double no-touch barrier options to take advantage of a stable or falling euro. Shahab Jalinoos, foreign exchange strategist in London, said consumer confidence data coming out of the U.S. over the last several weeks has started to show signs of growth in the third and fourth quarters. But he added capital flows between the two markets have switched to favor the euro-zone, which has caused the bank to shift its outlook toward a more stable euro.

Negotiations over the payee tax representations to be made in an ISDA Master Agreement are often confusing, acrimonious and slow. U.S. negotiators, at the urging of expensive tax counsel, often insist that their foreign counterparties make comprehensive tax representations for U.S. tax purposes and deliver certain IRS tax forms to them. Typically, foreign counterparties resist making these representations because they don't understand the purposes behind them. However, these payee tax representations, and the related delivery of tax forms, serve important purposes.

Five-year credit default swap spreads on Sony widened to 20 basis points/30bps last week from 20bps/23bps three weeks ago, due in part to the company having to recall defective cell phones. Stephane Delacote, head of credit derivatives at BNP Paribas in Tokyo, said three and five-year protection traded and there was also "aggressive bidding" in the 10-year contract.

Phoenix Investments has rotated 5% of its portfolio, or $100 million, out of high yield into mainly Treasuries, says David Albrycht, portfolio manager with the Hartford, Conn.-based asset management firm. The move was done to hedge some risky positions while balancing duration.

AMR Investment Services plans to add a total of $100 million in investment-grade corporates and mortgage-backed securities over the next three months in anticipation of further steepening in the Treasury yield curve. Patrick Sporl, a portfolio manager of $1 billion in intermediate-term taxable fixed-income, says he will sell U.S. Treasuries and agencies all along the curve to maintain his neutral duration to the 4.5-year Lehman Brothers aggregate index. His strategy is based on the assumption that the curve will steepen another 75 basis points between the two- and 10-year sectors by year-end. As of last Monday, there was 125 basis points of daylight between those poles. Sporl believes the Federal Reserve will ease another 50 basis points by year-end, and the overall economy will begin a turnaround as earlier cuts begin to take effect, sending long-term rates higher.

Up-front fees for institutional tranches declined slightly to an average of 3.0 basis points per one million dollars committed for June 2001, while pro rata tranches also dipped from an average 3.9 basis points to 3.6 basis points between May 2001 and June 2001 for a rolling three-month period. According to Portfolio Management Data, fees on pro rata tranches for the three months ending June 2000 were an average 2.7 basis points while institutional fees were an average 2.2 basis points for the same period.

Highmark Capital Management will swap 10% of its portfolio, or $200 million, from agencies into corporates and ABS, while shortening the duration, on the view that the yield curve will be steeper by year-end. Dick Grahman, portfolio manager with the San Francisco-based firm, says the economy will start to look brighter toward the end of the year, and an inflation premium will begin to be built into bond yields. The curve will steepen because, as the Federal Reserve holds down the short end, the long end will start to move up. He plans to deploy this strategy up to the end of the year, when he thinks rates may begin to move back up again. It may take a year and a half to two years before rates are high enough to buy back agency bonds, so he considers the trade a long-term shift in strategy.

This chart, provided by Citibank/Salomon Smith Barney Inc., tracks bid-ask prices for par credit facilities that trade in the secondary market. It also tracks facility amounts, ratings, pricing and maturities.

Gaming watchers are expecting up to five new issues from the sector over the next couple of months, bringing possibly as much as $1 billion in paper. Boyd Gaming announced a $200 million senior bond offering last Thursday, and high rollers believe three or four others are either planning an offering or weighing the market. Buysiders have shown a strong appetite for the paper: gaming paper traded 200 basis points wide of the high-yield average in the middle of 1997, and has steadily improved to its present position, approximately 280 basis points inside of high yield, according to Eric Matejevich, gaming analyst at Merrill Lynch. Gaming has been seen as a recession-proof industry because most M&A in the sector dried up early last year, leaving companies with strong free cash flow. While some investors are questioning that view since a recent earnings miss by Harrah's Entertainment, others remain eager for a place at the tables. Jacques Cornet, gaming analyst at CIBC World Markets, thinks the secondary market can handle $1 billion over two months without significant spread widening.

Moody's Investors Service assigned a Baa2 rating to Williams Companies $2.4 billion in aggregate credit facilities, consisting of a $1.7 billion 364-day credit agreement. Mihoko Manabe, v.p. and senior credit officer, says one of the company's biggest strengths is its diversity. Gas pipelines run throughout the U.S. and even internationally. "By being diversified, a company is less exposed to one market. Some reserve basins are more mature than others," she explained, adding that the company's most profitable pipelines are in the Southeast and West. "They have a lot of growth in the Southeast and a single long-haul pipeline running up the eastern seaboard," she said.

Nextel Communications "D" paper traded at 90 3/4, before softening to 90 1/2 early last week. Dealers noted selling pressure on this tranche. "The liquidity compared with the term loan 'B' is quite poor," a trader said. "The Street and accounts don't want to be holding this paper in the event that the company disappoints." Nextel is a communications company based in Reston, Va. A company spokesman declined to comment.