S&P gives BB to Owens-Brockway notes

Standard & Poor's said it assigned its BB issue-level rating and 5 recovery rating to Owens-Brockway Glass Container Inc.'s proposed $1 billion senior notes, which the company will issue with varying maturities, and placed the issue rating on CreditWatch with negative implications.

Proceeds, along with $1.25 billion in proposed term loans, will be used to fund the acquisition of Vitro SAB de CV's food and beverage glass container business.

If the Vitro acquisition is completed as proposed, the agency plans to lower the corporate credit rating and issue-level ratings by one notch and remove them from CreditWatch.

The 5 recovery rating indicates an expectation of modest (10%-30%; upper half of the range) recovery in the event of a payment default.

Owens-Brockway Glass is a subsidiary of Owens-Illinois Inc.

Owens-Illinois’ ratings remain on CreditWatch, where they were placed with negative implications on May 13 following the company's announcement that it reached a definitive agreement with Vitro to acquire the firm's food and beverage glass container business in an all-cash transaction valued at about $2.15 billion. The acquisition is being financed with $1.25 billion in proposed term loans and $1 billion in proposed unsecured notes.

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