Asbestos bank debt seen active; Intermet bonds heading in reverse

By Paul Deckelman and Sara Rosenberg

New York, Nov. 17 - Asbestos related names continued to trade around in the bank loan world on Wednesday, as Owens Corning paper was seen heading higher.

In distressed bond trading, Intermet Corp.'s were lower, although no news was seen out on the Troy, Mich.-based maker of cast metal automotive parts.

Bankrupt Toledo, Ohio-based insulation maker Owens Corning's loan was seen higher by about half a point or so to 81.5 bid, 82.5 offered, according to a trader.

At the same time, the bank debt of bankrupt Chicago-based building materials producer USG Corp. continued to be quoted at 113 bid, 114 offered and W.R. Grace & Co. continued to be quoted at 114 bid, 115 offered, the trader added.

"They're all kind of trading still on the Senate seat structure and people are still adjusting their portfolios," the trader said, explaining that Owens Corning's gain was just a result of this adjustment process.

The only asbestos names that really rallied on a different sort of reason lately were Grace, a Columbia, Md.-based chemical company, which moved on its recent filing of a plan of reorganization and disclosure statement with the U.S. Bankruptcy Court in Delaware, and USG, which moved up in connection with Grace's move, the trader added.

All of those companies were driven into Chapter 11 under a flood of asbestos-related lawsuits. Their debt had recently firmed on market expectations that the recent elections - which solidified Republican control of the Senate - made it more likely that after several years of legislative gridlock that body might actually now be able to pass a bill that would set up a mechanism to pay the claim of those who suffered medical problems after their exposure to asbestos - while stemming the deluge of future lawsuits and capping the companies' liabilities.

Other asbestos names seen Wednesday were Owens Corning's bonds, such as the 7% notes due 2009, 7½% notes due 2018 and 8 7/8% notes that were due in 2002, and the bonds of Armstrong World Industries, a bankrupt Lancaster, Pa.-based floorcovering maker.

Owens Corning's bonds were all were seen up ¼ point at 64.5. Meanwhile Armstrong's 6½% notes due 2005, 9¾% notes due 2008 and 9% notes that were to have come due to 2001, were off half a point at 70, as were its 6.35% notes that were to have matured in 2003.

Another asbestos-related name, bankrupt Southfield Mich.-based auto parts maker Federal-Mogul Corp., was unchanged at 30 bid.

Intermet plunges

Elsewhere, Intermet's 9¾% notes due 2009 were being quoted by one market source as having fallen to 32.5 bid, a loss of 3½ points.

Another trader saw the bonds down three points at 32.

Falcon Products' 11 3/8% notes due 2009 were seen having fallen five points to 55 bid.

A trader saw Delta Air Lines Inc.'s 8.30% notes 2029 a point lower on the session at 42.5 bid, while its 7.90% notes due 2009 and 7.70% notes due 2005 were unchanged at 55 bid and 86 bid, respectively.

A trader saw "not much action" in the notes of troubled Adelphia Communications Corp., the bankrupt Greenwood Village, Colo-based cabler's 10¼% notes due 2006 at 87 bid, its 10¼% notes due 2011 at 92 bid, 94 offered, and the company's 6% convertible notes hanging in at 18 bid 20 offered.

Another market source saw Adelphia unit Century Communications' zero-coupon notes due 2008 down a point at 61 bid.

For the first time in a number of weeks, Trico Marine Services bonds were being quoted around, the Louisiana-based provider of services to the offshore oil drilling industry's 8 7/8% notes due 2012 were at 51 bid, 51.75 offered

A distressed-bond trader said that overall, Wednesday was "a little blah."

He noted the recent strong movements of the high-yield market in general, and said that the downside of that was that "as everything moves up in price, there's not much in the way of [distressed] issues to buy."

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