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Moody's Investors Service downgraded Kellogg Company's senior unsecured debt to Baa2 from Aa2 in anticipation of the company's acquisition of Keebler for $3.8 billion in cash, plus the assumption of $555 million in existing Keebler debt. Kellogg is expected to obtain permanent long-term financing for a large portion of the acquisition financing within six months following the transaction. Keebler's bank credit facility will be cancelled following the acquisition, and the rating will be withdrawn. The acquisition will nearly triple Kellogg's debt. Despite the significant increase in debt, Moody's expects Kellogg to continue to direct a large portion of its internal cash flow to cash dividends as opposed to debt reduction. The rating also reflects Kellogg's exposure to the highly competitive, slow growth ready-to-eat cereal business. Supporting the rating is the relatively faster-growing cookie and cracker business to Kellogg's portfolio. Keeblers holds the number two U.S. market share in cookies and crackers. Calls to Thomas Webb, cfo for Kellogg, were referred to a spokesman, who did not return them by press time. Kellogg is headquartered in Battle Creek, Mich.

Houston-based Newfield Exploration is in the market with a $300 million, three-year credit facility to help fund the $333 million purchase price of Lariat Petroleum. The balance of the deal will be financed with stock. J.P. Morgan Chase and Bank of America are lead arrangers on the credit. Susan Riggs, treasurer, said she expects the facility to close oversubscribed in the next couple of weeks. "There are currently nine banks in the syndicate, but we expect more," she said.

Credit Suisse First Boston has been tapped to lead a $2 billion construction and acquisition credit revolver for Minneapolis-based NRG Energy, according to a banker familiar with the deal. The proceeds of the revolver will be used primarily to acquire assets from LS Power, Sierra Pacific, Conectiv and Wisconsin Energy (PFR, 1/22).

A $5 million piece of VoiceStream Wireless bank debt traded last week as dealers waved off the recent announcement of Deutsche Telekom's fourth quarter earnings losses and any harm that might do to its bid for Voicestream. Dealers reported a trade of the "A" tranche at 99 3/8, which is up slightly for the name. Calls to Voicestream, based in Bellevue, Wash., were not returned by press time.

Wellsford Real Properties recently used a new $32 million credit to refinance debt on a maturing $27 million construction loan. The Manhattan development and lending firm also needed capital to finance the third phase of redeveloping its Silver Mesa apartments into an upscale, luxury condominium community in Denver, said James Burns, cfo. Moreover, the company only had $700,000 remaining on its old loan and the terms of the financing did not allow for condominium construction. Wellsford eschewed the use of its credit facility because it wanted to remain nimble in case of future investment opportunities, noted Mark Cantulupi, chief accounting officer. "To the extent that we can, we look to keep the powder dry on our revolver," he said.

Judith Putterman, a veteran corporate bond trader, has joined Fuji Securities in New York to start a corporate bond trading desk. Putterman, who started last week, most recently worked at Coastal Securities, and prior to that, Oppenheimer & Co. At Fuji, she will specialize in covering and providing liquidity to institutional accounts, and will focus primarily on investment-grade credits in the secondary market. Bernie Jensen, who will be Putterman's supervisor, said the hire was made to complement Fuji in its core areas of government and agency bond trading. Jensen would not comment when asked if this was the first of a series of hires in this area.

Thunelius is director of the long-term fixed income group and senior portfolio manager for the taxable-fixed income group. His group of 12 portfolio managers oversees $5 billion in taxable-fixed income that runs the gamut from low-duration Treasury funds to generic mortgage-backed security funds. He received a Bachelors degree from Dowling College in Long Island, N.Y., with a major in finance. Here, Thunelius, who has been at Dreyfus for 12 years, talks mostly about the $430 million Premier Core Bond Fund.

A $25 million piece of Xerox Corporation's bank debt was unloaded last week, and dealers tagged the buyer as a Japanese bank looking to play the bank debt against the company's bonds. The debt traded in the low 60s, essentially flat to where it has been. The copier-based company is headquartered in Stamford, Conn. A spokesman declined to comment on the bank debt levels and said that officials will give a report of the fourth quarter earnings today.

Insight Communications' "B" tranche traded up to 100 1/8 early last week, with an additional trade hitting the par 5/8 level. "It's a good asset with little supply in the market," a dealer said the reason. Also helping levels was the relief on the "B" tranche, which dealers said had been oversubscribed. They said that the levels have been stable. The New York City-based cable company has expanded into two-way broadband networks. It serves 1.5 million subscribers mainly in Illinois, Indiana, Kentucky and Ohio. Calls to the company were not returned by press time.

Rick Lazio, former member of the House of Representatives and defeated senatorial candidate in New York, is being discussed in industry circles as somebody who might be considered to replace the current comptroller of the currency if the Bush Administration decides to replace him. Incumbent John Hawke is a Democrat. The White House press office refuses to talk about appointments before they are announced.

Dresdner Kleinwort Benson's union with Wasserstein Perella & Co has commercial bankers at Dresdner expecting to bear the brunt of cuts. A Dresdner insider said North American operations can expect to undergo the most structural changes, with the lending group being the hardest hit. Traditional lending will become more selective and disciplined, whereas historically, lending was more arbitrary, he added. "I think bankers in commercial banking would have a little problem" more than anyone else, he said.