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CIBC World Markets and Merrill Lynch have been selected to lead the proposed credit backing the buyout of Yell Corp., by private equity firm Hicks, Muse, Tate & Furst and Apax Partners & Co. A banker familiar with the situation said that British Telecommunication, which owns the phone directory business that includes Yellow Pages, may not proceed with the sale or it will be at a heavily discounted price.

Merrill Lynch is reorganizing its fixed-income research division to combine high-yield and investment-grade coverage in several sectors. The move is a response to a market which has seen an unusually high number of "fallen angels," or credits recently downgraded to junk status over in recent months, and the expectation that those credits or others may recover and move in the opposite direction. "Having investment grade separated from high yield is less tenable in the current environment than it was five years ago," says Thomas Sowanick, co-head of fixed-income research.

Harley Bassman, a 16-year veteran of Merrill Lynch's fixed-income options trading area, most recently as a managing director on the firm's OTC debt options desk, is the firm's new head of the real estate structured finance department. Bassman says this breaks down into running the firm's North American CMBS, MBS and ABS trading and sales efforts. He would not comment on why the change was made. While this is a new title within the mortgage trading operations he has effectively replaced Greg Odland, a 15-year Merrill veteran, whose new brief has yet to be determined, according to Odland. Odland, who came to MBS trading from the government trading desk several years ago, would not comment on why the shift occurred, but did note that he is planning on staying at Merrill. Bassman says that he is planning on growing certain areas within the MBS operation, but would not disclose which desks, nor provide a timeframe. Bassman will report to Tom Likovich, head of debt markets trading and sales in North America.

On the heels of the wildly successful Suiza Foods deal, First Union is back with another food/dairy deal, as a $210 million acquisition credit for Dairy Farmers of America is in the market. The credit backs its acquisitions of milk producers, Crowley Foods and Marigold Foods. First Union has reportedly offered agent slots to BANK ONE, Rabobank and Harris Bank. Exact agent titles could not be determined by press time. Calls to officials at Dairy Farmers of America were not returned by press time.

Moody's Investors Service assigned a B3 rating to Tokheim Corporation's reorganized debt obligations, following the company's emergence from Chapter 11 bankruptcy on Oct. 20, 2000. The rating affects $47,765 million new guaranteed senior secured revolving credit facility with a final maturity of September 2005. The company is based in Fort Wayne, Ind., and manufacturers gas pumps.

A $1 billion bond deal is said to be helping Nextel Communications's bank debt levels by providing liquidity. Several small trades totaling $20 million were reported last week, with levels topping off at 97 before settling at 95 1/2 to 96. Still, Nextel's bank debt is one of the most actively traded names, and dealers cautioned not to entirely rest the levels on the bond deal. "It should be marginally positive in my view and I would expect levels to firm," he noted, "but it's largely a technical at the moment." Calls to the company were referred to investor relations and were not returned.

SK Corp and Citic Pacific launched international bond issues this week to buoyant investor demand. Korea-based SK Corp's $250m senior unsecured Eurobond issue ended up three times oversubscribed and subsequently tightened 15bp in secondary markets.

ANZ Banking Group completed its $1bn global RMBS transaction this week, pricing its jumbo class of triple-A notes at 18bp over three month Libor. Lead managed by Salomon Smith Barney (SSB), the issue achieved the tightest spread among recent Australian global deals for a single amortising tranche. It also came at the tight end of price talk that was 18bp-19bp last week.

It has been a busy week in the Australian equity markets as bankers completed or were due to complete more than A$1bn of new issues. There is also a spate of IPOs on the way, including a possible jumbo offering of Glencore's coal assets in the third quarter. Deutsche Bank and Macquarie Equities combined yesterday evening (Thursday) to complete a $118m convertible bond and A$159m equity issue for rapid growth video gaming machine maker Aristocrat Leisure.

China China's flag carrier, Air China, is considering an overseas stock offer that could be launched in the first half of 2002. The $500m offer could be listed on the Hong Kong and New York stock exchanges.

The Korean government yesterday (Thursday) was forced to clarify misunderstandings about comments from officials that the administration will not rush to privatise assets if market conditions are not favourable. Some observers took this to mean that the planned Korea Telecom $2.5bn American depository receipt (ADR) offering might not proceed as planned in mid-June. "If there are shares left over from various sales, we won't dump them on the market just to meet the June 2002 deadline," said an official, stressing that the ADR issue is still on track. The government owns 58% of Korea Telecom and has repeatedly said that it wants to sell the entire stake by mid-2002.

Melbourne Airport made its debut entrance into the domestic bond market this week to a strong investor reception. The issuer accessed the market with a multi-tranche A$700m bond issue, combining two different tenors and fixed and floating rates to appeal to as wide an investor base as possible for its debut market entry. The multi-tranche transaction, which was launched yesterday (Thursday), was expected to be priced today (Friday).