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Rayner Associates is buying select secondary corporate credits on the view that their spreads are still lagging the primary market in reacting to the Federal Reserve rate cuts, with investors able to pick up an additional 20-30 extra basis points, according toArno Rayner, chairman. The firm, which manages $150 million in taxable fixed income, is using new money and cash earned from dividends and interest to buy single-A rated or better bonds with durations of eight to 13 years.

Manning & Napier Advisors, Inc. is selling Treasuries to purchase high-quality corporates it expects to weather the slowing economy, along with agencies, whose current spreads are wide on a historical basis. George Nobilski, president of the firm's fixed-income division, which runs $3 billion in taxable bonds, says his recent purchases include the 10-year paper of Corning (A2/A) and Pepsico (A1/A), whose respective spreads over Treasuries are 150 and 125 basis points, and five-year Diageo Plc (A1/A+), at 150 over."The names we're buying are on the conservative side," he says. "We're starting to pick and poke at some of those values."

Source: Thomson Financial/Securities Data. For more information, call Rich Petersonat (973) 645-9701.

Meridian Management is using new cash and the sale of some Treasuries and agencies to capture spreads on investment-grade corporates that are at historical wides. Pat Moon, a managing principal for $100 million in taxable-fixed income, says the last 18 months have provided a unique opportunity to buy corporates that have undergone spread-widening amid concern about slower economic growth. He recently purchased several million dollars of Baa3/BBB rated Dana Corp.'s 63/4% notes of 3/1/04, whose wide spread, currently about 580 basis points over comparable Treasuries, Moon attributes to wider concern about a downturn in the auto parts industry and their exposure to liability for using asbestos in some of their brake pads. "Our feeling is their exposure is minimal," he adds.

Lyon Street Advisors has sold about $200 million worth of investment-grade corporates over the past six weeks to buy agencies and Treasuries, thereby locking in the profits from the January rally. Mitchell Stapley, who manages $2 billion for the Grand Rapids, Mich.-based firm sold its lower rated investment-grade paper, but is still overweight after adding corporates in November and December. Stapley sold PotashCorp 71Ž8% notes of '07 (Baa2/BBB), Citibank 75Ž8% notes of '36 (Aa2/AA-), and Ford 7.45% notes of '31 (A2/A), and bought the safer Treasuries and bullet agencies with durations of seven to 10 years.

Laurent Gauthier, former MBS analyst with the recently shuttered fixed income unit of Prudential Securities in New York, has joined Banc of America Securities in New York. He describes his new position as an " all-around MBS strategist," where he will concentrate on the pass-through and CMO markets. He will report to Sharad Chaudhary, the residential MBS research chief who is based out of Charlotte. Chaudhary says he is replacing former prepayment modeler Warren Xia, who recently left the firm. At Prudential, Gauthier reported to MBS research head Inna Koren. Prior to that, Gauthier was an MBS analyst at Goldman Sachs.

A piece as large as $20 million of Finova Group's paper traded at 80 last Wednesday as dealers are riding in the wake of news that General Electric Capital Corp. and Goldman Sachs are angling to take control of the company. The trade is in line with levels two weeks ago in which bids for Finova's paper jumped 10 points. One dealer said last week that the bond levels have jumped around from 73 to 80. Another remarked that the paper trades continuously and it's hard to gauge whether any market speculation is fueling trades. "There's probably something going on that we all don't know about," said a dealer familiar with the credit. He declined to elaborate.

FleetBoston Financial is in the market with a $180 million credit on behalf of radio and television broadcasting company, Liberman Broadcasting, and a $105 million telecom deal for Conversent Corporation, a Northeastern CLEC.

Schlumberger, the oilfield services company that last week bought Sema Group, an information technology company, has no publicly traded debt outstanding but will most likely need to tap the bond market in the near future to diversify its leverage away from bank debt, says Carol Levenson, analyst at Gimme Credit in Chicago. If it does so, investors should be wary. She argues that the company will leverage up both rapidly and, perhaps, frequently. She pegs the likely rating of the company at "not much better than triple-B." Most of its existing leverage comes from bank debt. "I'm sure it won't be hard for their investment bankers to convince them the bond market is just dying for some Schlumberger paper," she says. Calls to Schlumberger were not returned by press time.

J.P. Morgan Chase in London is in the market with a roughly E5 billion deal for French beverage company Pernod Ricard, backing the company's $3.15 billion purchase of part of the Seagram Spirits and Wine Business from Vivendi Universal. A banker familiar with the deal said Société Générale is acting as mandating arranger on the deal, which is expected to close this week. The banker said J.P. Morgan Chase is looking for commitments between E250-350 million for underwriting positions. He said the deal has been well received as Pernod Ricard has a number of leading brands in its beverage portfolio.

Oft-traveled supply-side economist Larry Kudlow has left ING-Barings to form an economics-consulting group. Kudlow declined to specify the reasons for the departure, and provide specifics of the new venture, but an executive at ING-Barings points to the firms uncertain future as a cause for the departure, with the firms well publicized inability to find a buyer all but sealing its doom. ING-Barings was Kudlow's third stop in the last several years; he had previously worked at Schroeder & Co., and buyside asset-manager and life insurer American Skandia.

Standard & Poor's has assigned a B+ rating to Linc.net Inc.'s $230 million secured credit facility because of the financial constraints on the credit. Joel Levington, associate director at S&P, observed that the revolver is only $30 million. "Whereas before they had more flexibility for working capital and to pursue their business plan, they're somewhat limited today than they would've been with the old facility," he explained. "They were a different company when that facility was assigned. There were four acquisitions they had on their letters of intent, and due to lack of finance opportunities, they had to let those four acquisitions go." The new facility is indicative of what they could get from the credit markets, Levington said. Linc.net, based in Miami, Fla., provides a variety of network infrastructure services, including central office installation, network infrastructure engineering, and last-mile deployment. Daniel Harrington, cfo, did not return calls for comment.