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Up-front fees on both pro rata tranches and institutional tranches reached their annual highs as fees on pro rata pieces jumped up to 5.2 basis points and fees on institutional pieces to 3.1 for March 2001. According to Portfolio Management Data, fees on pro rata tranches from the three months ending March 2000 were 2.9 basis points and fees on institutional tranches were 2.1 basis points for every one million dollars committed in March 2000.

Allied Investment Advisors, a Baltimore-based investment firm, will rotate from Treasuries into ABS when it thinks the Federal Reserve is done lowering interest rates, according to portfolio manager Wilmer Smith. Smith, who oversees $300 million of the firm's $7 billion in fixed-income assets, argues this will probably not be until the May 20 FOMC meeting, and he is anticipating an inter-meeting rate reduction. But, when the Fed is finished, he is ready to rotate 5%, or $15 million, of his short Treasury position into liquid AAA ABS credits in the HEL sector.

Grantham, Mayo, Van Otterloo & Co. has been buying the commercial loans of the Republic of Algeria, as well as Russian Federation 30-year Brady bonds, on the view that they provide both safety and high total return.

Buysiders gagging on telecom and hungry for industrial and healthcare deals are now being pinched by a bond market that is becoming more welcoming and sapping bank loan tranches. The latest example is DaVita, Inc., an acute healthcare provider, which decreased its $500 million bank deal to $425 million last week while maintaining its $200 million bond deal. "The high-yield market is hot for healthcare," said Richard Whitney, cfo of DaVita, explaining why the company decided to go to the bond market as it refinanced its credit facility. "We still could have gotten the deal done [if bonds weren't an option], but a larger percentage would have gone into the "B," he said.

A number of buysiders were taken aback by last week's 10-15 basis point tightening in corporate spreads during another round of equity market turmoil, and some are forecasting there may be further tightening. "It's rather unusual to watch a corporate rally when stock prices go down," says Greg Habeeb, portfolio manager at Calvert Asset Management Group, who runs $2 billion assets for the Bethesda, Md.-based firm. Players put the tightening down partially to technicals, as some Street firms were caught short in the final week of the quarter, and positive fund flows in to the mart.

Countrywide Securities, the debt capital markets arm of mortgage lending giant Countrywide Credit Industries, has tapped several Street pros to fill newly-created slots in its MBS sales and structuring units at its Los Angeles headquarters. On the sales side is Jim Tennille, a former pass-through trader in Charlotte for several years with First Union Capital Markets, who started last Monday. He reports to national sales head Mack Humphries; at First Union, he reported to MBS trading chief Tim Coyne. Coyne says that he has assumed Tennille's duties, and wouldn't comment on his departure. Tennille says although a switch from trading to sales is a challenge, the combination of working at a shop with "an intense concentration in one product area that is expanding rapidly" was too good to pass up.

Issuance picked up on the week as corporate treasurers took advantage of low absolute yields to push debt into the market. Despite the selloff in equities, the tone in corporates remained firm as money continued to flow into the sector. Average deal size increased and the weighted average credit quality of issuance improved as well. Unlike high yield, where there has been a significant reversal of risk appetite in March, BBB corporates have kept pace with AA bonds. That said, bondholders are increasingly demanding that new issues include protection from deterioration in credit quality. American Home Products included a step-up coupon to compensate bondholders for downgrade risk, as did France Telecom in its jumbo deal last month.

Bankers said last week that Deutsche Bank may only raise between $50 million and $100 million for FairPoint Communications compared to the original $150 million add-on deal the bank originally had planned. Sources said the bank has not been able to raise enough interest in the deal or commitments to come up with an additional $75 million for tranches "B" and "C" of the company's existing credit. Tim Henry, v.p. of finance and treasurer, said, "The jury's still out," when asked about the fate of Deutsche Bank's best efforts deal for the company. "We have had a fair amount of interest and there is still interest in the credit," said Henry, in response to rumors in the market two weeks ago that the deal may be pulled entirely, as was Credit Suisse First Boston's deal for Nextel Partners.

Steve Wood, the longtime Banc Of America Securities financial markets economist and managing director, has left the firm to join online start-up Financial Oxygen, a newly launched electronic bond trading and portfolio management firm, as head of its economic advisory service, according to Chris Nichols, director of content. Wood, who will report to CEO Robert Oxenburgh, is to be responsible for developing economic commentary on data releases and Treasury market movements, as well as possible Federal Reserve movements. Wood joined approximately three weeks ago. His analysis will be offered as part of the analytics package at Financial Oxygen, which is aiming to be an online, one-stop transaction, pricing and analytics site for "middle-market" banks and thrifts that have investment portfolios between $50 million and $1 billion. A B of A spokesman confirmed his departure, declining further comment.

FleetBoston Financial is in the market with a $130 million add-on deal for Houston-based Plains Allamerica Pipeline LP's Canadian subsidiary Plains Marketing to fund the Canadian company's plans to finance the purchase of $160 million in assets of Canadian-based Murphy Oil Company. Al Swanson, treasurer, said the company attached the subsidiary's acquisition credit to the parent's outstanding $700 million credit in an effort to keep pricing lower and covenants more lenient. Swanson explained that with this structure all tangible hard assets under the combined entities will back the revolver.

A $15-20 million piece of Harnischfeger Industries' bank debt traded at 41, softening one point due to the announcement last week that Asia Pulp & Paper had filed for bankruptcy. The buyer and seller could not be determined. The Asian company, which was a customer of Harnischfeger, defaulted on its $200 million receivables contract two years ago. "It's why Harnischfeger ran out of money," said a market player, noting the tie between this situation and the recent announcement by Washington Group that it had financial troubles from Raytheon. "If you're a contractor, you've got to have liquidity,"he said. Harnischfeger, based in St. Francis, Wis., manufactures heavy equipment for the mining industry.