Securitization People and Markets

TELUS, a Canadian phone corporation, saw its U.S. dollar-denominated 7.5% notes of '07 and 8% notes of '11 drop from 63 to 47 after a ratings downgrade to junk from Moody's Investors Service. One buy-side junk analyst blames the steep drop on forced selling pressure from investment-grade money managers.

Jonathan Hatcher has left the Scottsdale, Ariz., offices of Strong Capital Management, where he was a senior high-yield analyst covering the cable and media sectors, according to an analyst with knowledge of the move. He will join former colleagues at Delaware Investment Advisors in Philadelphia later this month as a v.p. and senior analyst covering financial, high-yield and high-grade credits. The position is believed to be new, though the firm did release at least one analyst earlier this year. Hatcher declined comment, and Ward Tatge, senior v.p. and director of fixed-income research, did not return calls.

Mike Smith will join Wachovia Securities today as a high-yield trader, according to a firm insider. It could not be determined whether he is replacing someone or filling a newly created position. Tim Dowling, managing director in high-yield sales and trading at the Charlotte, N.C.-based dealer, did not return calls. Smith resigned from Merrill Lynch earlier this year (BW, 2/10). He could not be reached.

A pair of high-yield healthcare analysts are advising investors to buy HealthSouth bonds, which were subject to heavy selling recently on rumors that the crossover healthcare provider may have accounting-related skeletons in its closet. However, "the rumors don't seem to be well-founded" in the case of HealthSouth, says Susannah Gray, analyst at Merrill Lynch. Another analyst, who dislikes the company because he says it continually reneged on promises to pay down debt in 2001, also believes the bonds will rally. "But then I'd probably short them," he says.

Service Corp. International saw its 6% notes of '05 (B1/BB-) drop nearly two points to a bid of 88 after the unexplained resignation of Jerald Pullins, coo of the funeral services provider. A successor has been chosen from within the firm.

A committee of 15 WorldCom investors with over $8 billion in the company's bonds has formed a committee and tapped Houlihan Lokey Howard & Zukin last Wednesday to serve as its financial advisor in negotiations with the scandal-ridden telecommunications company. The committee hopes to unite with two other groups of investors that own the bonds of WorldCom's subsidiaries: MCI and Intermedia to give it more clout. Jeffrey Werbalowsky, senior managing director and co-head of Houlihan Lokey's financial restructuring group, acknowledged that his firm is advising what he called an "informal" group of WorldCom bondholders, but declined further comment. A WorldCom bankruptcy was widely viewed as imminent at press time. Jim Millstein, managing director at Lazard Frères, which is advising WorldCom, declined comment.

Robert Fraley has left Merrill Lynch, where he was a director and a distressed analyst, to join Fortress Investment Group. Fraley had worked at Merrill Lynch in various positions since 1996. It could not be determined whether a replacement will be hired. Neither he, nor Barbara Scholl, managing director and head of distressed research, at Merrill Lynch, returned calls. Randal Nardone, Fortress coo, declined to comment.

European high-yield issuers are proceeding with deals this month despite poor investor sentiment, continued credit downgrades and abysmal equity markets. "It's ironic that the busiest two weeks of the year for high-yield coincides with the worst weeks for overall market sentiment," says one high-yield trader in London. With three or four more deals in the pipeline, investors have been lightening up on holdings considered too rich, which, coupled with general financial market woes, has put the secondary high-yield market off by two or three points, he adds.

Volume was light last week, say traders, but several beaten up names got a lift, including Qwest Communicationsand Paxson Communications.The cable sector also turned in a decent week.