Owens Corning's bank debt has been volatile over the last couple of weeks, propped up by reports that a bill providing for a universal asbestos trust is on the way and pressured by its bankruptcy proceedings and a large seller of paper. After sinking to the 50 level early this month due to market expectations that the bankruptcy judge will make a ruling that could threaten bank debt holders' recovery, Owens Corning soared back up to the 60 level as news concerning a universal asbestos trust disseminated through the market. Then early last week, the market for Owens Corning's bank debt slumped once more into the 551/2 571/2 range as a major dealer was believed to be paring its exposure to the name. Levels rose back into the 571/2 59 range once more as the introduction of the bill neared.
Reports indicate that the size of the asbestos trust will be $108 billion with contributions to the trust made from insurers and companies plagued by asbestos liabilities. The language of the bill will dictate how the asbestos plagued companies and the insurance companies will contribute to the trust, noted Dennis Archer, president-elect of the American Bar Association. Market players had expected the bill to be introduced last week, but as LMW went to press there were no indications that more than a draft had been presented. If the legislation goes through, it is likely that the companies will not have to contribute as much to their own asbestos trusts, leaving more value for creditors, explained one trader. A spokesman from Owens Corning said it was too soon to tell how the bill would affect Owens Corning and noted that the company was moving forward with its confirmation process.