Moody's confirms Owens-Illinois, rates unit notes B2

Moody's Investors Service on Thursday assigned a B2 rating to the new $300 million 144A notes with registration rights to be issued by Owens-Brockway Glass Container Inc., a subsidiary of Owens-Illinois Inc., and confirmed the ratings of Owens-Illinois, including the . The outlook remains negative. The ratings reflect the strong competitive position of the company in the glass container industry, but also Owens-Illinois' high leverage, its thin free cash flow relative to its debt load and the threat to this free cash flow represented by rising asbestos litigation-related payments. Assignment of the rating to the new notes reflects the somewhat lower quality of the collateral and guarantee package granted to the new bondholders in comparison to that already granted to existing bank lenders.

Fitchs cuts Starwood Hotels & Resorts

Fitch has lowered the Starwood Hotels & Resorts Worldwide Inc.'s implied senior unsecured rating to BB+ from BBB-, along with downgrading the company's debt and its unit, ITT Corp. The ratings have been removed from watch. The rating outlook is negative.

The downgrade reflects the reduced cash flow generated by Starwood as a result of the slowing economy and the events of Sept. 11, Fitch said, which will result in weakened credit profile. In addition, Starwood's cash flow visibility to total debt, which has deteriorated, is expected to remain at levels more appropriate for the rating category. Fitch expects leverage will increase to greater than 5.0 times and interest coverage will decline below 3.0 times on a trailing 12-month basis during the first half of 2002. However, as comparisons become easier during the second half of 2002, credit statistics should show improvement, but remain below levels appropriate for investment grade rating category.

Fitch cuts Hilton Hotels senior unsecured notes to BB+ from BBB-

Fitch has lowered the rating on Hilton Hotel Corp.'s senior unsecured notes and debentures to BB+ from BBB-. In addition, the rating on Hilton's senior subordinated notes has been lowered to BB- from BB+ and commercial paper to B from F3. The rating outlook is negative.

The downgrade reflects the reduced cash flow generated by Hilton as a result of the slowing economy, the events of Sept. 11 and high leverage for the rating category. In addition, cash flow visibility to total debt has been weak for the rating category and Fitch expects this trend to continue. While revenue per available room (RevPAR) trends have shown meaningful improvement since Sept. 11, business travel (nearly two-thirds of Hilton's business) has been dramatically reduced, leading to a significant decline in both occupancy and room rates that could extend throughout much of 2002.

The negative rating outlook reflects the possibility that results could be weaker than expected due to a prolonged recession and the current negative operating environment, Fitch said.

S&P rates new Teco convertible BBB+

Standard & Poor's assigned a BBB+ rating to Teco Energy Inc.'s new convertible, trust preferred securities sold via Teco Capital Trust II. The outlook is negative.

S&P said the negative outlook reflects the challenges for Teco Energy to remain at the current rating level.

"Maintaining the current rating depends on rebalancing the company's overall capital structure, including less reliance on debt leverage," S&P said. "In addition, successful resolution of the financing terms and conditions related to projects being built by NEPCO, an Enron Corp. subsidiary, are an important part of potential ratings stability. Specifically, Standard & Poor's expects TECO Energy to restructure NEPCO power development construction arrangements, facilitate plant construction while proceeding on schedule and within budget, so that forecasted project cash flows are achieved, and bank financing for power development projects remains accessible."

S&P noted Teco management has publicly stated its desire to maintain its existing ratings and has delayed repowering the Bayside Units 3 and 4 for Tampa Electric Co. and the CITGO project for Teco Power Services, reducing external financing needs in 2003.

The company has also committed to raising one-half of the expected external financing between 2002 and 2004 in the form of common equity and this issuance.

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