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On the view that the flight to quality is over, Mercantile Capital Advisors is shortening portfolio duration and swapping out of treasuries and agencies into spread products, says Kevin Dachille, portfolio manager with the Baltimore-based investment firm. The manager--who calls his tactic a recovery strategy--anticipates the economic slowdown will end soon.

John Hancock Advisers, the Boston money manager with some $1.5 billion in taxable fixed income, has been shifting its $800 million high-yield fund into a stronger weighting in bonds issued by companies in Mexico, Columbia, and Brazil. Arthur Calavritinos, v.p. and portfolio manager, says he recently added just over 1% of his portfolio (or about $10 million) to investments in those countries, and expects to add another 5% ($40 million) by this time next year, though he isn't looking for a specific trigger for the next move.

Merganser Capital Management is planning to go 10% over its benchmark's duration because the firm is bullish on short-term bonds, says Douglas Kelly who manages a $2 billion of short term bond portfolio. The steepening of both the yield and credit curves allows for an extra pick-up in yield and spread, which is why he is extending the term of his picks.

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.

Sellside analysts say Liberty Media's announcement last week that it will fund United-Pan Europe Communications through a convertible bond that will be senior to outstanding UPC paper, instead of the planned rights offering, raises concerns about the extent of Liberty's commitment to the subsidiary. UPC 11.25% notes of '10 traded down from about $60 to $55 on the announcement, and analysts say UPC has funding needs that will be difficult to meet, and should leave bondholders looking for the next opportunity to trade out of the credit. Calls to Liberty were not returned by press time.

Barclays Capital is looking to hire a loan researcher to round out the staff of its par trading desk. Jeff Glasse, head of trading, says the bank recently secured a fifth sales member and is now seeking a loan researcher to support trading. Most recently the bank hired Ellen Luntz, formerly of Goldman Sachs, to work on its sales team. "We're delighted to have her back," he said, noting that Luntz worked for Barclays in the early 1990s.

Bank of America this week will launch syndication of a $400 million credit for Spokane, Wa.-based Potlatch Corporation. The deal will be split between a $200 million, three-year revolver priced at LIBOR plus 2 1/2% and a $200 million term loan "B"priced at LIBOR plus 3%. The company will also be doing a new senior sub note issue following launch of the bank deal. Gerald Zuehlke, cfo, said, unlike on the old credit, the company restructured the new facility to include a "B" tranche to reach institutional players. "It's another avenue to get capacity. The bank credit markets are tight, so it's harder to spread it out with the commercial banks so we are doing a "B" to gain more capacity," he said, explaining that the company has strategized according to current challenging market conditions regarding pro rata tranches and the decrease of available commercial lenders due to consolidation. The credit replaces a $250 million revolver and a $150 million bridge loan also led by B of A.

Special servicers for the commercial mortgage-backed securities industry are preparing for an increase in delinquencies, the first time the mart will have had to handle the phenomenon, according to Real Estate Finance & Investment, a BW sister publication. Investors have expressed concern about special servicers' readiness to handle the increase, but preparations have included the addition of seasoned workout staff, upgrades in technology and a practice of monitoring the performance of a loan during its life. "The market is seeing an increase in delinquencies," reflects Stephanie Petosa, a senior director at Fitch. "Servicers are describing their operations as prepared for an increase and we are attempting to verify that through reviews."

Comdisco's bank debt slipped to the low 60s in a $10 million trade last week as uncertainty surrounded the credit. Bank of Tokyo-Mitsubishi was rumored to be the seller, though it could not be confirmed. Officials at the bank did not return calls by press time. A company spokeswoman declined to comment on trading levels. "We're reassessing our business, so we're really not in a position to comment at this time," she said.

Credit Suisse First Boston last week launched syndication of a $200 million, six-year term loan "C" for Cincinnati-based optical network communications company BroadWing Inc., formerly Cincinnati Bell. As first reported on LMW's Web site, Bank of America is syndication agent and Citibank is the administration agent on the deal, which refinances a $1.8 billion credit originated in November 1999 and amended to $2.1 billion in January 2000. A banker familiar with the situation said the money would pay down a portion of the $900 million revolving credit portion of that deal, in order to enhance liquidity. Pricing is LIBOR plus 21/2 % on the Ba1 rated credit. Citibank led the original loan.

Stephen Ledoux and Neil Augustine, the co-lead portfolio distressed debt portfolio managers at Morgens, Waterfall, Vintiadis & Co., where they oversaw $500 million in mostly distressed loans and some distressed bonds, have left the firm to join Rothschild Inc. The two will advise creditors and debtors during bankruptcy processes. As a result, MWV has shut down its distressed debt product and has returned assets to clients, which included foundations and endowments, pension plans, and high-net-worth individuals, according to Susan Waterfall, marketing director at MWV. She says some of the firm's clients have opted to reinvest in the firm's long-short equity fund, adding that some $50-100 million already has been switched over.