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Warnaco Group's levels dropped more than a dozen points after the company announced it was under investigation by the Securities and Exchange Commission, and there is expected to be a rush to unload the paper. Bids on the company's bank debt fell from 40 to the high 20s as dealers holding the paper started looking for a way out. "All of the big dealers are trying to push their own paper because they have such large exposure," one market player noted. "They are trying to sell their paper at any price just to get out, so they are undercutting other banks' offers." Calls to the company were not returned.

There was barely a rumble in the market after Winstar Communications' announcement that it would default on its bank covenant. The company filed for Chapter 11 bankruptcy last Wednesday. Traders pegged levels at 32-37. "No one's surprised, that deal has been a dog for a while," one said of the announcement. Winstar is a competitive local exchange carrier based in New York City. Calls to the company were not returned.

Lucent Technologies and TeleCorp PCS are planning to re-offer $425 million in vendor financing paper and are considering putting together a second roadshow to market the deal, according to BW sister publication Telecom Financing Week. In March, TeleCorp, the largest AT&T affiliate, planned to raise some $425 million via a private sale of the vendor paper in the form of zero-coupon, 10-year notes to Lucent, which then planned to sell the paper to institutional investors, afterwards. But adverse market conditions drove yields up and the deal was shelved. A Lucent spokesperson declined to specify the yield Lucent and TeleCorp were seeking.

The $150 million institutional piece of Flowers Foods blew out last week and the same is expected for similar deals hitting the market now that food has become the sector du jour. Buysiders continue to balance out their telecom exposure and the food sector is making a turnaround as investors define it as a defensive credit and reconsider the strength of the industry as a whole.

The market seems to be in a wait-and-see mode on Owens-Illinois Inc.'s restructured deal, signed last week after the last of the 81-member bank group got on board. The term loan is being offered in the Street at 98.5, but there were no trades. "The question is, where's the bid?" observed a dealer.

Reich & Tang Capital Management has hired Hamilton Hadden to the new position of head of credit research for the firm's New York-based fixed income group, Global Investment Advisors, to accommodate an increase in assets under management. Formed in 1998 by a group of investment advisors who, like Hadden, come from J.P. Morgan Investment Management, GIA now manages some $700 million in assets, up from $150 million a year ago. Eduardo Cortez, a GIA co-founder, says the expanding asset size allows the firm to create a more formal division between analysis and portfolio management, though each of the investment advisors at the firm does a bit of both. Cortez says he may hire a slightly more junior credit analyst in a year or so, if the size of assets doubles or triples over that time.

Charles Wyman, a high-yield telecom analyst and principal, has left Morgan Stanley Dean Witter for Pacific Investment Management Company in Newport Beach, Ca., according to BW sister publication Telecom Financing Week. A PIMCO official confirms the hire, but did not have his starting date or title. He did note that Wyman will be reporting to Craig Dawson, the head of the high-yield group. Wyman had been based in New York.

Moody's Investors Service upgraded the senior secured debt rating for Nextel Partners to B1 from B2 because of solid operating performance over two years. Nextel has consistently exceeded Moody's expectations for network deployment and subscriber additions. The company, based in Kirkland, Wash., has $1.3 billion in debt and credit facilities.

Under the gun because of a congressional deadline, the Federal Reserve by May 12 will introduce an interim rule that imposes new regulatory restraints on derivative transactions between banks and their non-bank affiliates, industry sources predicted last week. Normal procedure would be a proposed rule offered for a period of public comment. The concern in industry circles last week was whether the new interim rule would designate derivatives transactions with affiliates as "covered transactions." In that case, billions of dollars worth of derivative flows could be subject to transaction size limits and collateral requirements under Section 23A of the Federal Reserve Act.

Furr's Restaurant Group this month signed a $55 million credit facility that replaces bonds set to mature at the end of the year. The credit, a $20 million revolver and a $35 million term loan, offers a better route than bonds, said Paul Hargett, cfo. "We got a deal to redeem the bonds and for working capital and growth," Hargett said. "Given the market and rates on bonds, a credit facility fits our needs." The company was paying 12% on the bonds and will pay all-in pricing of approximately 8% on the bank facility.

An auction held last Thursday night resulted in a $44.2 million trade of Integrated Health Services bank debt. Dealers said there were two small trades earlier in the week at levels in the same range. Bank of Nova Scotia was rumored to be the seller of the piece. A bank spokesman did not return calls by press time. Mariner Post Acute Health Network also traded at 51-53 last week, although the size of the trade could not be ascertained. Integrated Health, based in Sparks, Md., owns or operates approximately 365 nursing homes and more than 15 specialty hospitals that offer wound management, cardiac care, Alzheimer's disease treatment, and other rehabilitation services. A company spokesman did not return calls by press time.

U.S. Industries is rounding up $700 million in bank commitments to retire existing debt and acquire a 75% equity interest in Rexair, Inc. from Strategic Industries. R. Bruce Clitheroe, treasurer of USI, added that the existing credit facility expires in December, and the new deal is contingent upon the successful sale of $550 million of 10-year subordinated notes. Parts of the proceeds of the notes will be used to pay down $100 million of the company's existing senior notes due '03. The bank group led by Deutsche Bank, was selected based on existing relationships with USI, Clitheroe said. Bank of America and Credit Suisse First Boston are also lead lenders.