S&P rates USG notes BB-

Standard & Poor's said it assigned a BB- rating to USG Corp.'s proposed $250 million senior unsecured notes due 2020.

The notes have a recovery rating of 1, indicating 90% to 100% expected recovering in a default.

The notes are being offered in accordance with Rule 144A, S&P said.

The proceeds will be used to repurchase its $300 million 9¾% notes due 2014 that have been validly tendered and accepted for payment under a recent tender offer.

The ratings reflect the company's weak business risk and highly leveraged financial risk, S&P said.

The company's earnings and cash flow have been subject to wide swings with wallboard volumes largely influenced by residential construction activity, the agency said.

The ratings also recognize that the company's credit measures are likely to remain extremely weak due to cyclically poor financial results for at least the next several quarters, S&P added.

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