Dealers said Owens-Illinois bank debt jumped up to 99 5/8 to par as the market responded to recent news that the company has upsized its planned bond offering to $1 billion. "Don't trade it," cautioned one dealer, noting that a larger bond deal will likely mean more bank debt will be retired at par. The market apparently heeded this sage advice, as movement on the name had frozen by the end of the week. In the past two months, the debt, feeding off of rumors of the 144A private transaction, has crawled up from 93. Adding to that fire, dealers believe the company is expected to pay down at least two-thirds of its current term loan, although Owens-Illinois has made no official promise. A source close to the company said the company has stated its intentions to repay the term loan and also to address its 2004 and 2005 maturities in the next couple of years.
In April 2001 Owens-Illinois received a $4.5 credit line facility led by Deutsche Bank, Bank of America, and Bank of Nova Scotia. The credit included a $3 billion revolver and a $1.5 billion term loan. Both priced at LIBOR plus 2 1/2 %. Currently, the company has paid down $445 million of the term loan, and has $2.5 billion outstanding on the revolver. The loans are set to mature in March 2004. In addition to the bond offering, traders see the company growing stronger as it moves farther away from its asbestos litigation issues of last year.