S&P rates GITI Tire B+, notes B-

Standard & Poor's said it assigned its B+ corporate credit rating to GITI Tire Pte. Ltd. and assigned its B- rating, subject to final documentation, to a proposed issue of up to $200 million in senior secured notes due 2012.

The outlook is stable.

The issue rating is two notches below the corporate credit rating as the notes are subordinated to substantial bank debt held by the company's operating subsidiaries in China. Proceeds will be used to extend a $160 million loan to GITI's sole and immediate parent company, GT Asia Pacific Holdings Pte. Ltd. and to pay off a $160 million three-year amortizing credit facility due in 2009.

The rating reflects weaknesses that include the inherent industry risk of a highly fragmented and competitive market, exposure to high volatility in raw materials costs, weak cash flow protection and high leverage, S&P said.

The weaknesses are partly offset by strengths that include its leading market position, extensive proprietary distribution network in China and substantial cost advantage over global peers in overseas market sales, the agency added.

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