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Moody's Investors Service assigned a Ba3 rating to the $1 billion guaranteed senior secured credit facilities of Semiconductor Components Industries due to anticipated softening in the end-use markets of wireless communications and computers. The Phoenix, Ariz.-based company is the largest independent supplier of semiconductor components. "The problem with a lot of these semiconductor businesses is that visibility is not very clear starting out 2001. With softness over the last several months, a company whose revenues and cash flow has been growing throughout the first three quarters of 2000, may be peaking and we don't know that," said Howard Sitzer, analyst. The rating also factors in the risk associated with future acquisitions. The company recently acquired Cherry Semiconductor and keeps a watch for potential beneficial acquisitions, said a company spokesman. "They're not denying or precluding future acquisitions, so that would be a risk issue. It would be for any company," said Sitzer. "Any acquisition has integration issues that can be problematic. You've got to align your engineering teams, align your sales and marketing effort." He added that Cherry Semiconductor has done well since the acquisition.

Moody's Investors Service notched down the rating on Bethlehem Steel's $600 million inventory secured bank facility to Ba3 from Ba2 because of the market's impact on the company's operating performance. Operating margins have declined to negative 2.5% for the third quarter from a previously narrow 2.4% in the second quarter. Debt protection measures are weaker, with earnings before interest, taxation, depreciation and amortization (EBITDA) interest coverage at 1.4 times, down from 4 times for the first half last year. Furthermore, prices have fallen along with demand, while imports have been reaching record levels. Moody's acknowledges that the company is reducing costs and cutting capital expenditures. J.P. Morgan leads the deal, according to Capital DATA Loanware. A company spokesman for the Bethlehem, Pa.-based steel producer declined to comment. • Moody's lowered Quality Distribution's $360 million bank facility to B1 from Ba3 after the company reported a third quarter revenue decrease of 4.9% to $149 million. Earnings before interest, taxation, depreciation and amortization (EBITDA) for the nine months ended Sept. 30 last year was $56 million versus $62 million for the same period in 1999. Leverage is also high at 5.3 times, and adjusted last 12 months EBITDA to interest coverage was 2 times. The rating considers, however, debt reduction of $17 million to $417 million since year-end 1999. Credit Suisse First Boston, BT Alex. Brown and Salomon Smith Barney are the mandated arrangers, according to Capital DATA Loanware. Richard Brandewie, cfo of the bulk chemical transporter in Tampa, Fla., did not return calls.

The additional $550 million J.P. Morgan Chase tossed to Federal-Mogul to help pay for asbestos liability claims split up the seniority of existing debt, sparking trades at levels far above where the credit had been lolling. A $15 million piece of the $1.75 billion credit facility changed hands at about 60 Thursday, after $3 million was traded Wednesday at 55. Those numbers are up considerably from levels just two weeks ago, when the paper was bid at 38.

Daisytek International, a wholesale distributor of computer and office supplies, has signed a $120 million credit facility to fund operations and acquisitions, replacing an existing $105 million facility due to expire at the end of the month. George Maney, cfo, says the new facility allows the company to borrow against assets and cash flow, as opposed to borrowing against only assets before. "It provides us the flexibility to carve out receivables and inventories and borrow an additional $50 million. It allows us to double-dip," he explained. BANK ONE and Bank of America lead the new deal, which went out to bid. Chase Manhattan Bank led the former deal and opted not to bid for the new facility. "Chase wanted to stay with the old borrowing-based facility," Maney said, adding that none of the banks in the old syndicate are in the new one for the same reason. He explained that the company's management changed last summer when PFS Web spun off from the company. The company pursued the new financing in part to fund acquisitions.

Bergen Brunswig dropped existing lender Wachovia Bank and selected GE Capital over a host of prospective lenders because the bank offered the most flexible long-term loan. "We can pay down the next day if we want to. With the other facility, if we borrowed $350 million, we were stuck with $350 million for two weeks. If we're flushed with cash suddenly, we can pay down and reduce interest expenses," said Linda Williams, assistant treasurer. Donna Doland, v.p. finance, added, "We can access it more often. The one we had before was not flexible, had access to it only once every two weeks." Doland posited that Wachovia may not have been interested in providing longer-term financing for the company because of post-acquisition difficulties. "We've bought some companies recently and have had a tough time integrating them," she said, declining to explain further. Wachovia officials did not return calls. The new $450 million deal was signed Dec. 20, and replaces Wachovia's $358 million, 364-day revolver.

The rumor whipping through market last week had Thomas Bunn, former head of leverage finance at Bank of America, heading to Morgan Stanley Dean Witter, but Bunn said nothing was brewing there. As first reported on LMW's Web site, Bunn said he has "not been in any negotiations with Morgan Stanley. I'm flattered you all think I'd be able to get a new job 10, 20 days after my departure," he quipped. Bunn left B of A in December, a move that surprised many in and out of the bank. William Kourakos, head of high yield capital markets at Morgan Stanley, was on vacation and could not return phone calls. Bram Smith, managing director of global high yield capital markets at Morgan Stanley, did not return calls. Officials at B of A declined to comment.

Bank of Nova Scotia will bring to market a $300 million, 364-day revolver backing Biovail Corporation's $409.5 million acquisition of Aventis Pharmaceuticals, according to an official familiar with the deal. Ken Howling, v.p. finance of Biovail in Mississauga, Ontario, would only confirm that Scotia has arranged the financing and that the company has enjoyed a long-standing relationship with the bank. He added that the company is very satisfied with the deal's terms. He declined further comment. Biovail is a pharmaceutical company. Aventis, based in Bridgewater, N.J., is the U.S. pharmaceutical subsidiary of Aventis SA. Aventis and Scotia officials did not return calls. Scotia will launch syndication with a bank meeting in Toronto, but a date has not been decided. The banker also said that Scotia has not decided if there will be a preliminary round of syndication seeking other titled agents and managing agents. Pricing will be leverage-based, but the banker declined to reveal the grid, spread and Biovail's current leverage. Linli Chee, analyst at Standard & Poor's, estimated the company's current debt to capitalization adjusted for operating leases is between 55% and 60%. "They've already drawn down $150 million from the new revolver, so it's definitely pushed passed the previous 48%." In October of last year, S&P confirmed Biovail's BB- corporate credit rating. S&P is currently in talks with Biovail management regarding its Aventis acquisition, and should issue a new rating report sometime this week.

Korea Development Bank (KDB) is aiming to access either the international bond or loan market in the first quarter of the year to help meet its annual refinancing needs, according to a KDB official this week. The state owned policy bank has $2.45bn in debt maturing over the course of the year, and is interested in accessing the international market to help refinance its redemptions.

China Shanghai Hua Hong (Group), China's premier chipmaker, has appointed Salomon Smith Barney and BNP Paribas Peregrine to help raise $300m in a Hong Kong IPO later this year. Hua Hong is a joint venture between Japan's NEC and the Shanghai government.

Bank of China International (BoCI), Credit Suisse First Boston and Merrill Lynch are set to begin the premarketing of the New York and Hong Kong IPO of China National Offshore Oil Corporation (CNOOC) next week. If all goes well, the deal will be launched after the Chinese new year holiday of January 24-January 26. Pricing is slated for late February.

The European Investment Bank (EIB) was the first bond issuer of the new year when it privately placed a HK$2bn bond issue on Monday morning. The Aaa/ AAA supranational tapped the market with a five year fixed rate deal via lead manager HSBC. "The entrance into the market by a supranational for a sizeable deal has helped demonstrate Hong Kong's market liquidity, even at the beginning of the year," said a syndicate official at HSBC. "We expect bond issuance to be busy up until the Chinese new year in January's fourth week, as there are a lot of deals maturing and needing refinancing."