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The Bond Market Association has formed a high-yield committee that will work with regulators to ensure that a new National Association of Securities Dealers corporate bond trade reporting system, called TRACE (Trade Reporting and Comparison Entry), preserves dealer anonymity and doesn't dry up liquidity in smaller investment grade and high-yield issues. Michel de Konkoly Thege, BMA associate general counsel and staff adviser to the committee, says in less liquid markets, "a firm's willingness to commit capital to holdings in a particular security could diminish if other market participants anticipate what their strategy is."

A $9 million piece of Hayes Lemmerz International's pro rata traded around 87 out of Sanwa Bank early last week, calls to the bank were not returned. The buyer could not be determined. It was the first trade for the credit. "[The company is] getting crushed because the demand for cars is decreasing," a market watcher said. The Romulus, Mich.-based company, which makes steel and aluminum wheels for vehicles, is said to be feeling the effects of a weak automotive sector. General Motors,Ford and Daimler Chrysler account for 60% of its sales. A company spokesman did not return calls for comment.

Moody's Investors Services downgraded Cambridge, Mass.-based Polaroid Corp.'s bank loan rating to B2 from Ba2 citing the decline of the company's traditional core business and the inability of new product contributions to offset the weakness in the old. Furthermore, the necessity of refinancing $500 million of bank loans by January in a weakening market has contributed to the action. The rating reflects the increased competition the company is facing in the digital photography sphere, its challenge to generate free cash flow this year and vulnerability to contractions of the U.S. economy. The current rating level is supported by the company's large installed base of instant film users, the continued growth of its new product offerings and an expectation that capital expenditure reduction will occur in 2001. Polaroid is attempting to sell assets to pay off debt, including a 56-acre property in Waltham, Mass., and has announced plans to cut expenses of $60 million a year.

The game of guessing where the bottom is for the telecom sector is cramping the style of some staple names in the secondary market. Players who are hedging their bets on where the paper will level out are trading old standbys such as Nextel Communications, which traded in the 98 1/2 to 98 3/4 range last week. McCleod USA, once trading above par, traded in the 99 range. A $5 million piece of SpectraSite Communications' bank debt traded at 97 7/8.

Bankers said roughly $200 million in commitments came in at the bank meeting last week for Deutsche Bank, Bank of America, and Credit Suisse First Boston's fully underwritten $700 million deal for U.S. Industries.Royal Bank of Scotland and Bank of Nova Scotia have reportedly signed on as documentation agents on the deal. Buysiders said they were not surprised that the $275 million "B" tranche did well early on as they consider it a strong credit. But one noted that the company's possible vulnerability to economic cycles may slow the sale of the outdoor furniture manufacturer's credit.

Williams Communications, holding an underwriting commitment from Salomon Smith Barney and Lehman Brothers, may increase the term "A" piece of its credit after the $300 million, six-year term loan "B" credit was pulled from the market. As first reported on LMW's Web site last week, the "B" tranche was pulled after stalling despite tweaks to revive it. A banker close to the deal said the company will decide later this month on the size of the potential increase to the "A" tranche, which was fully subscribed early last week. Sources said Salomon and Lehman will go back to the market with the term "B" at a later date when the telecom sector improves. But ultimately, it's the company's call. A Williams official noted that, even though the credit is not fully funded, the firms did sign a letter of commitment. The Williams official declined to comment on discussions regarding a hike up on the $450 million pro rata piece.

W.P. Carey & Co. signed a $185 million credit facility this month for general operating expenses, replacing a similar deal due to expire this month. John Park, cfo, says terms and covenants are almost identical. "It's to acquire, develop and retire existing debt," he explained. The New York-based company does lease-back financing to single-tenants in 40 states. He says the company's strategy is to diversify, rather than concentrate business in a particular section of the country. Park says the company actually benefits from a slowing economy. "As corporations find other forms of capital are scarce, they're turning to us for financing because they get better terms," he said.

A $750 million bond deal is nudging levels for Tricon Global Restaurants' bank debt into the 99 range, which is up from the 97 range. The company a little more than a week ago, announced a bond deal that would pay down the bank debt. Dealers say $15 million had traded last week. Buyers and sellers could not be confirmed. "The credit has been doing well lately, but the coupon has always been very low and as a result has traded at a discount," a trader noted. Dealers say the fast food industry, like cable, is resilient in a weaker economy. Tricon, based in Louisville, Ky., owns KFC, Taco Bell, and Pizza Hut. Company officials did not comment by press time.

Buysiders said they are hoping Credit Suisse First Boston and Bank of America will increase the $175 million "B" tranche on the $425 million credit launched for healthcare concern DaVita, Inc. two weeks ago. Buysiders said the "B" is oversubscribed as a result of a well structured credit and desire by buysiders to up their allocations to the sector. A buysider noted that the $250 million pro rata continues to struggle in the face of a tough pro rata market while the "B" blew out and the bond market, also hot for the sector, is reportedly offering a coupon of roughly 9 1/4% on the notes. Richard Whitney, cfo, was not available for comment by press time. Credit Suisse First Boston and Bank of America did not return calls.

Lyondell Chemical Company's "E" tranche traded just above 103 last week, down slightly from 103 1/2 about two months ago. "It's actually come off. The call protection steps down in a few months, and people are anticipating it," said a dealer. The company has call protection at 103 through June then 102 through June of 2002. The Houston-based company makes polymers that are used in synthetic trash bags, containers and sports equipment. Dealers have said the company has been an exception to the recent hit in the chemical sector.

CIBC World Markets is buying assets for a EUR800 million ($720 million) CDO, backed by a pool of European bonds and loans, as the European CDO/CLO market continues to develop. According to Bondweek, an LMW sister publication, the CDO will be managed by London-based Duke Street Capital, a private equity buyout shop. Some assets have been warehoused, and the manager is aiming to have 50% bought by the start of May when the deal closes. The deal, which is scheduled to price at month-end, is part of a wave of European CDOs signaling the market is finally starting to take off: first quarter CDO flow this year topped $15 billion, against the $2.5 billion recorded in the same quarter last year, according to Standard & Poor's.