S&P cuts USG to negative, gives notes BB

Standard & Poor's said it revised the outlook on USG Corp. to negative from stable and affirmed the B+ corporate credit rating.

The agency also assigned a BB issue-level rating to its proposed $300 million senior unsecured notes with a 1 recovery rating to the proposed notes, indicating an expectation of 90% to 100% recovery in a default.

The agency also said it lowered the ratings on the company's $500 million of senior unsecured notes due 2016, $500 million of notes due 2018, and IRBs to B from B+ and revised the recovery rating to 5 from 4, indicating 10% to 30% recovery in a default.

The proceeds will be used as a source of additional liquidity and for general corporate purposes.

The outlook revision to negative reflects an expectation that USG's operating results and cash flow are likely to continue to suffer during the next several quarters due to still contracting commercial construction activity and the ongoing depressed level of housing starts, S&P said.

The recent increased weakness in housing starts has made it more likely that any meaningful recovery in housing starts may be deferred until late into 2011 or 2012, the agency said. That delays any improvement in USG's credit measures, S&P said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.