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S&P cuts USG, rates notes BB-
Standard & Poor's said it assigned its BB- issue-level rating to USG Corp.'s (B/positive/--) proposed $350 million senior unsecured notes due 2021, based on proposed terms and conditions.
S&P said it assigned the notes, which benefit from subsidiary guarantees, a 1 recovery rating, indicating an expectation of high (90% to 100%) recovery for investors in the event of a default.
At the same time, the agency lowered the issue-level rating on USG's outstanding senior notes that lack subsidiary guarantees - the $500 million 6.3% senior notes due 2016, the $500 million 7¾% senior notes due 2018 and about $239 million of industrial revenue bonds - to CCC+ from B- and revised the recovery rating to 6 from 5, indicating an expectation of negligible (0% to 10%) recovery in the event of a default.
The downgrade and recovery rating revision of the unguaranteed senior notes and IRBs reflect diminished recovery prospects given the increase in the amount of structurally senior guaranteed debt, S&P said.
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