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Buysiders say they will maintain their positions in Nextel Communications paper, at least for the short term, despite a three-to-four-point price drop in its outstanding high-yield paper last week on news of a $1 billion convertible deal. Benchmark 9 3/8%s of '11 fell from $83 before the deal was announced to $79-$80, before returning to the previous levels. Market players say the new issue raised particular concerns because it is pari passu with the high-yield debt, meaning it will not be subordinated to straight bonds, as convertibles typically are. Still, the new bond is seen giving the company another $1 billion for capital expenditure in a tight market and improving financial liquidity, which investors say balances the scales for the credit. A call to the company was not returned as of press-time.

Dealer analysts in the high-yield sector are expressing concern about the effect the Securities and Exchange Commission's Regulation FD is having on the debt market, according to BW sister publication Corporate Financing Week. They argue that junk issues have tremendous credit sensitivity due to their leverage factor, requiring a continuous stream of information to keep them at a stable price. But this information, integral for bond pricing, has slowed to a trickle under the rule, according to Michel de Kokoly Thege, v.p. and associate general counsel for the Bond Market Association in New York.

Katonah Capital is in the final stages of wrapping up a $425 million collateralized debt obligation named Katonah II Ltd. According to a source close to the deal, Katonah is in its final investing phase, looking at a variety of sectors, after it priced the notes for the vehicle in the beginning of March. The CDO is a traditional cash-flow arbitrage structure with an 85% investment in loans and a 15% investment in high-yield debt. Final close on the vehicle is expected in late July. Chase Manhattan Bank is trustee and Kohlberg & Co. is the majority equity investor. Officials at Katonah Capital declined to comment.

Moody's Investors Service has upgraded the debt ratings of Magellan Health Services Inc. to B1 from B2, citing Magellan's progress in exiting from non-core operations and completion of asset sales that improve liquidity. Columbia, Md.-based Magellan has a $100 million revolver and is the largest behavioral managed care provider in the U.S. with over three times as many covered lives as the next competitor. The company recently sold National Mentor, a community-based foster care provider, for $100 million in cash, increasing liquidity, according to Moody's.

Houston-based energy exploration company, Magnum Hunter, two weeks ago closed a $225 million credit facility with lead Deutsche Bank after putting the credit out to bid to Deutsche Bank, Credit Lyonnais, BNP Paribas, and CIBC Workd Markets. After Deutsche Bank was selected as administrative agent, Chris Tong, cfo of Magnum, explained that the company tapped CIBC to act as syndication agent. "We put the business out to bid to our existing lenders that we thought could play a lead role," he said. Tong said the company's decision to select Deutsche Bank as the lead was more a result of the company's comparatively longer historical relationship with the firm rather than a more competitive pricing structure. In terms of Deutsche Bank winning future bond business from the company, Tong said, "Certainly they will have a good opportunity to do that."

An $8 million piece of Mariner Post Acute Network's bank debt traded at 56 on Wednesday, with ABN-Amro rumored to be the seller. The buyer could not be ascertained, but dealers said the latest trade is even to recent levels. "All of the health care names have improved," said a trader. A company spokeswoman did not return calls. ABN officials did not return calls by press time.

Ohio Casualty Corp. is nearing the end of a covenant waiver extension and bankers expect the insurer to make a move to refinance, according to Insurance Finance & Investment, an LMW sister publication. Ohio Casualty has a $250 million credit line through J.P. Morgan Chase that contains a covenant requiring the company to maintain $750 million in statutory capital. That provision severely limits the company's flexibility, especially as its levels dropped to $765 million by year-end 2000. Earlier this year the insurer renegotiated the minimum statutory capital level down to $650 million only until the end of June. A spokeswoman for Ohio Casualty declined to comment, and calls to J.P. Morgan Chase were not returned by press time.

Deutsche Bank is leading a credit for Argentine conglomerate Perez Companc that employs a novel structure that allows the company to repay the loan with oil. The repayment feature is designed to mitigate the risk of currency and convertibility risk. Pricing and the amount of the credit could not be ascertained. Officials at Perez did not return calls.

An auction last week resulted in the sale of a $17 million chunk of Owens Corning's bank debt around 60 and a $13.5 million piece of Harnischfeger Industries' bank debt at just under 54, up three points for the credit. Owens is also said to be inching up, having traded in the 58 context the week prior. Wisconsin-based Harnischfeger manufactures heavy equipment for the mining industry.

Regal Cinemas is reportedly preparing a new bank deal to retire debt and word of the new credit is pushing up levels on the existing loan. A $10 million piece of the company's bank debt traded last week at 93, up about five points from recent levels. Details about a new deal have yet to be hammered out, bankers said. Calls to a company spokesman were not returned by press time.

The imminent merger between Deutsche Telekom and VoiceStream Wireless has traders viewing their bank debt as one credit, so news on one is affecting the other. Early last week a $10 million piece of VoiceStream's paper traded at 99 3/4, which is down slightly for the name. Traders attributed the move to a ratings downgrade of DeutscheTelekom. "There's some selling pressure on the Deutsche Telekom downgrade and refinancing concerns," a trader noted. Mobile phone operator VoiceStream is based in Bellevue, Wash. Calls to a company spokeswoman were not returned.