Bank of America's portfolio-pruning mode kicked into high gear last week as the bank sold more than $200 million in asbestos-related names. B of A has been busy reducing the number of names in its portfolio, but dealers said last week the big lender was particularly active. The bank reportedly sold a $50 million piece of Federal-Mogul to kick off the week at a level in the high 50s and then continued unloading with a $70 million piece of W.R. Grace; $85 million of Owens Corning in the mid-60s; and $70 million of USG at a level of about 70. The levels on those names moved up with the trades. Peter Santry, managing director and head of distressed trading for Bank of America, declined to comment. Buyers of the paper could not be determined by press time.
"B of A has a lot of asbestos names so it certainly makes sense that they would think it's time to lighten up," one dealer said. A trader said the deals were sold privately through the desk to funds. One dealer said asbestos names had a strong week as some fund managers, asbestos litigation and all, are focusing on the potential upside of the stronger names. A portfolio manager following industrials said the perception is that the asbestos crisis has passed. "We bought the bonds on Owens-Illinois in the beginning of the year at around 60 and now they're over 90," he said. Even though funds aren't as nervous about the paper six months ago, he warned that actuarial statistics on possible bankruptcies are constantly changing. "Six months ago the market thought the paper deserved a huge discount because you may never get your money back," he said. He noted that Federal- Mogul is reportedly planning some asset sales, which should help the company pay down bank debt.
James Fisher, spokesman at Federal-Mogul, did not return calls by press time. Robert Williams, spokesman at USG declined to comment. William Corcoran, spokesman at W.R. Grace did not return calls by press time. Dave Dimmer, spokesman for Owens Corning declined to comment.