Securitization People and Markets

Sell-side analysts say bonds of Samsonite Corporation (Caa1/CCC+) are an attractive pickup for investors, as they expect a fairly healthy economy and a return to something resembling normalcy in the travel industry within the next year. Arthur Roulac, consumer products sector analyst at Banc of America Securities, says that among the credits he covers, Samsonite has been hit the hardest in the wake of the attacks on the U.S. The luggage maker's 10.75% senior subordinated notes of '08 were bid in the mid- to high-60s last week, having been in the low- to mid-80s throughout August.

Morgan Stanley has hired Drew Hanson to lead its high-yield telecom research effort, according to Bill Reiland, head of high-yield research at Morgan Stanley. Hanson, a runner-up on the Institutional Investor 2001 All-America Fixed-Income Research Team while at Credit Suisse First Boston, is the first of several additions Reiland will be making in an effort to add experience and prestige to the firm's high-yield research effort.

Bear Stearns has hired asset-backed securities trading veteran Chris Connors to do institutional sales/trading for its ABS secondary desk in New York. His first day was last Wednesday. The position is a new one and, according to Connors, it has not yet been determined which sector he will trade, nor what his title would be. Bear Stearns fixed-income executives were uncertain as to whom Connors would directly report, and Tom Marano, the mortgage-backed securities trading floor manager, was unavailable for comment. Jeff Verschleiser, the firm's head of asset-backed trading, did not return a call seeking comment.

Devon Energy is preparing to issue a $2-3 billion note offering, with both 10-year and 30-year tranches in the next several weeks, according to BW sister publication Loan Market Week. Larry Nichols, the president and ceo of Devon, says the proceeds will be used to finance the purchase of Calgary-based oil and natural gas producer Anderson Exploration. It is also part of a larger financing scheme involving a five-year $6 billion term loan, to finance the cash portion of the acquisition of Mitchell Energy & Development announced last month. Nichols says UBS Warburg and Banc Of America Securities will lead both the note offering and the loan.

Brentwood, N.Y.-based Allou Health & Beauty Care, a distributor of health and beauty-aid products, is looking to issue $150-200 million in high-yield bonds in the near future to improve liquidity, according to BW sister publication Loan Market Week. David Shamilzadeh, president and cfo, declined comment on the purposes of the debt. The company has recently switched lead banks from Fleet Capital to Citibank and Congress Financial after a competitive bid offered a better interest spread. Congress is a unit of First Union National Bank. Shamilzadeh says the old $180 million asset-based revolver carried a rate of 3 1/2% over LIBOR while the new loan carries a rate of 2 1/2% over LIBOR. "The pricing speaks for itself," he said.

American Airlines is bringing a $2 billion enhanced equipment trust certificate transaction to market today, considered the largest EETC to date, according to BW sister publication Corporate Financing Week. Merrill Lynch and Morgan Stanley will be co-joint bookrunners. The issue will be sold under rule 144A to qualified institutional investors. The second largest EETC was issued by United Airlines and came in slightly over $1.5 billion in December 2000.

Eric Green, a portfolio manager at Penn Capital Management, has recently been adding to his position in Pegasus Communications on the view that Pegasus is an excellent yield play and a likely takeover candidate. Green has been buying the zero coupon notes of '07 (Caa1/CCC+) because they offer considerably more yield than comparable cash pay paper, and he believes the principal will be paid off when the bonds mature. Last week, the zeros traded at 58, giving it a current yield of 18.14%, while 9.625% senior notes of '05 (B3/CCC+) traded at 92, giving them a yield-to-worst of 12.14%.

Top ranked high-yield paper and forest products analysts are divided over whether falling commodity prices will drive down the price of bonds and create an opportunity for investors to swap into lower-rated names for additional yield. Bill Hoffmann, an analyst at UBS Warburg and a second-teamer on Institutional Investor's 2001 All-America Fixed-Income Research Team, says weak commodity prices could eventually drive down high-priced credits such as Riverwood International senior subordinated notes (Caa1/CCC+) and Caraustar Industries (Ba1/BB-). This will create an opportunity for investors to swap out of higher-rated names, such as Tembec (Ba1/BB+), Norampac (Ba2/BB) and Smurfit-Stone Container (B2/B).

Stephen Stonberg has joinedJ.P. Morgan Securities as a managing director in London to head up its credit derivatives effort in Europe. He joins from Deutsche Bank in London, where he was head of repackaging and portfolio swaps restructuring. A J.P. Morgan executive in London was uncertain whether this was a new position, or if not, who Stonberg replaced. Stonberg will report to Jonathan Laredo, the head of structured finance for Europe and Asia, and to Bertrand des Pallieres, head of rates marketing. Stonberg resigned from Deutsche Bank three weeks ago, according to a London asset-backed banker. Des Pallieres was on vacation and could not be reached for comment. Laredo did not return calls. J.P. Morgan's spokeswoman in London, Eileen Darko, declined comment.