Dealers last week were keeping a close eye on asbestos credits, expecting that after USG Corporation filed for Chapter 11 bankruptcy the last two standing would soon follow. "Everyone's waiting on Crown Cork & Seal and Owens-Illinois," a dealer remarked. He believes that bankruptcy protection is a short-term solution to a long-standing problem. "[Chapter 11] might protect these credits for now, but it will prolong the inevitable," he said. Early last week Owens Corning traded down slightly to 62-63 in a $20 million trade. A spokesman from USG declined to comment. Calls to officials at Owens-Illinois and Crown Cork were not returned.
Dealers said most of the activity in USG came before the filing. On the day of the bankruptcy announcement, no trades were reported. "There was a lot of selling of the paper; people were thinking this thing would file," a trader said. He added that levels dipped to 53, before rebounding back up to high 50s-low 60s. USG has a $600 million deal that breaks down into two tranches. J.P. Morgan Chase, Bank of America, Bank One, and Citicorp are the lead arrangers.