S&P downgrades USG

Standard & Poor's said it lowered its corporate credit rating on USG Corp. to B from B+, along with the ratings on the company's $300 million and $350 million senior unsecured notes due 2014 and 2018 to BB- from BB.

The 1 recovery ratings on these notes, indicating 90% to 100% expected recovery in a default, remain unchanged.

The agency also said it lowered the issue-level ratings on USG's two $500 million senior unsecured note issues due 2016 and 2018 and industrial revenue bonds to B- from B.

The 5 recovery ratings on these notes, indicating 10% to 30% expected recovery in a default, remain unchanged.

The downgrades reflect an expectation that USG's operating results and cash flow are likely to be strained over the next year due to the ongoing depressed level of housing starts and still-weak commercial construction activity, S&P said.

It is now more likely that any meaningful recovery in housing starts may be deferred until late 2012 or into 2013, the agency said.

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