Analysts warn of bankruptcy threat

Bloomberg news posted a speculative story today that suggests that Ineos Group Holdings, Georgia Gulf Corp. and Chemtura Corp. could be in danger of filing for bankruptcy. “The most leveraged names are the first ones that are going to run into problems,” Andrew Brady, a New York-based analyst at CreditSights Inc., told Bloomberg. “The market knows they are struggling, and there is a huge risk of bankruptcy.” Debt and derivatives for those three companies "are trading as if they are on the brink of bankruptcy," the report noted. "Bonds issued by closely held Ineos lost 90 cents on the euro, and credit derivatives priced in almost certain odds the company will default. Georgia Gulf bonds trade as low as 16 cents on the dollar." The report notes that Chemtura could sell assets to avoid defaulting on its debt. "If by the end of the first quarter, there are no deals to sell assets, the chance of bankruptcy goes up considerably," said Dmitry Silversteyn, a Longbow Research analyst in Independence, Ohio. Ineos, Georgia Gulf and Chemtura aren't the only plastics/chemicals companies to report bad news today. Saudi Basic Industries Corp. reported that its profit in the fourth quarter dropped 95 percent. The company blamed "the decline in demand for petrochemical products and metals because of the economic recession that has hit the world's major economies, as well as the credit crunch that led to difficulties for consumers in obtaining the necessary financial facilities from banks and financial institutions."