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An auction last week resulted in a $45 million trade of Finova Group's bank debt at 81. Bank of Nova Scotia was reportedly the seller. A spokesman did not return calls. Bear Stearns was rumored to be the buyer, but dealers there declined to comment. According to market players, the credit was highly bid for at the auction. Dealers said levels were up from 79 two weeks ago and traded at 81 1/2 in the Street at $5 million. While traders say the credit is still viewed as attractive, once Finova hits a certain level, it becomes harder to trade. "There's still a little deal risk; once you get in the 80s, it's tough," said one, adding that investor Warren Buffett's interest in the name has been the sole drive behind the levels. The Phoenix, Ariz.-based company offers financial services to small and mid-sized companies.

Fleet Retail Finance, the asset-based lending unit of Fleet Boston Financial, is seeking commitments to fill a $365 million credit facility for Hudson, Ohio-based Jo-Ann Stores, Inc. Don Tomoff, v.p. finance for Jo-Ann, noted that the facility was launched on April 25 and syndication is expected to close within the next two weeks. Some commitments are already in, he noted, declining to provide figures or name other banks involved.

Market appetite for energy credits has pushed up levels for Dresser Equipment's term loan "A" and "B" and dealers said as much as $50 million changed hands last week. The term loan "A" traded at 1001/ 4 and the "B" paper traded at 1001/ 2, as lenders left with skinny allocations cashed out. Dealers explained that when final allocations get so small that it is not worth the administrative work, lenders will sell paper back to the agent at a profit. "Nobody wants $1 million as a credit; it's too much to manage," one trader explained. Dealers taking 1/8 or 1/4 on each trade are generally happy to oblige.

As tough as the corporate credit deterioration has been on bank loan quality, it is not as severe as it was a decade ago, according to a recent report by Moody's Investors Service. John Lonski, chief economist at the ratings agency, noted that bad loans at banks are rising, with non-performing assets at the 19 major banks included in a first quarter sample, rising to $24.9 billion at the end of March, from $22.5 billion at the end of 2000. One bank, that Lonski declined to name, plans to exit from lending to the telecommunications, energy and mining sectors, further contributing to a rise in NPA's relative to outstanding loans. As a percentage of loan losses, NPAs jumped from 54% in the first quarter of 2000 to 70.2% at the end of March.

Moody's Investors Service has upgraded Teterboro, N.J.-based clinical lab testing business, Quest Diagnostics, Inc.'s $1.325 billion senior secured credit facility from Ba3, to a near investment grade Ba1. "Moody's is comfortable with the performance of the company, particularly the integration of SmithKline Beecham's clinical trials operation and the improved cash flow," noted Russell Pomerantz, v.p., senior analyst for Moody's.

New Edge Networks secured $77.5 million in new financing to complete the company's build out of its network. The company opted against going out to bid for the new facility and instead awarded the deal to First Union, a first-time lender for New Edge, said Sal Cinquegrani, executive director of investor relations. "It's remarkable considering the state of telecom right now," said Cinquegrani, who was involved in the financing. "We met the folks at First Union through other contacts, and they were very interested in our story and made an investment in us [with the bank loan]. They offered a package that was most attractive to us."

Nextel Communications' term loan "B" notched down a few points last week to the 92 1/2-93 1/2 range, from a previous high of 96. The trades were in the $5 million range, although totals could not be determined. Some dealers attributed the fall to "technicals" and predict the name will trade back up. "In any different market, if this was trading in a vacuum, it would be above par," said one. A company spokesman did not return calls.

Cleveland, Ohio-based chemical concern, OM Group, will tap existing leads Credit Suisse First Boston and National City Bank for as much as $500 million in bank debt to help finance its EURO1.2 billion ($1.085 billion) purchase of German chemical company Degussa AG. LMW reported on its Web site last Tuesday that the company was in talks with CSFB and National City, historical leads on the company's credits.

FleetBoston Financial's $250 million asset-based credit for Phoenix, Ariz.-based PETsMART, Inc. is expected to be $20 million oversubscribed by the time it closes this week, according to bankers. One banker noted that the company switched lead arrangers from Bank of America to FleetBoston as Fleet's retail lending unit was able to provide an asset-based lending structure, imposing less covenants on the company. Thomas Liston, cfo of PETsMART, did not return repeated phone calls. An official at Bank of America declined to comment.

Teco Power Services and Panda Energy International are seeking $2.2 billion in loans to finance construction of 4,400 MW of greenfield generation capacity in Arizona and Arkansas, according to Power Finance & Risk, an LMW sister publication. The facility, led by Citibank and Société Générale, comprises a $1.7 billion, five-year bullet loan and a $500 million equity bridge loan, according to Linda Miller, senior v.p.-finance at Teco in Tampa. Officials at Citibank, Société Générale and Panda did not return calls.

Grand Rapids, Mich.-based Steel Case Inc., the world's largest manufacturer of office furniture, closed a $400 million credit facility this month with Citigroup as the lead arranger. Perry Grueber, director of investor relations, explained that following the acquisition of a 100% interest in Strasbourg, France-based Strafor, an office furniture maker with which Steel Case had a joint venture, two credit facilities of roughly $200 million each were in operation. The Michigan company wanted to consolidate to finance future acquisitions.

Moody's Investors Service assigned a Ba3 rating to Superior Energy Services' $50 million senior secured term loan and its $70 million senior secured revolving credit based on the company's aggressive growth strategy. According to Helen Cavelli, senior analyst and v.p., it's a strategy the company continues to pursue. "They were very small five years ago and have grown very rapidly through acquisitions," she said.