Moody's rates Goodyear loans Ba1, Ba2

Moody's Investors Service said it assigned Ba1 (LGD1, 4%) ratings to Goodyear Tire & Rubber Co.'s $1.5 billion first-lien revolving credit facility and the €505 million first-lien revolving credit facilities of Goodyear Dunlop Tyres Europe BV and certain subsidiaries and a Ba2 (LGD2, 20%) rating to Goodyear's $1.2 billion second-lien term loan.

The agency also affirmed the company's third-lien secured term loan, 11% senior secured notes, floating-rate senior secured notes, floating-rate unsecured notes, 9% senior notes and 8 5/8 % senior unsecured notes at B2 (LGD4), but changed the loss-given-default rate of these securities to 59% from 63%.

Goodyear's B1 corporate family and probability-of-default ratings, SGL-2 speculative grade liquidity ratings and B3 (LGD6, 94%) senior notes and senior unsecured convertibles notes were affirmed.

The outlook was changed to positive from stable.

The agency said the B1 corporate family rating recognizes Goodyear's substantial scale, global brands with refreshed product offerings, leading market share, diversified geographic markets, lengthened debt maturities and continuing solid liquidity profile.

The B1 rating also considers Goodyear's substantial leverage, low EBIT returns and weak coverage ratios, which were affected by the recent strike in North America as well as un-recouped raw material costs and weak replacement tire demand in that region, Moody's said.

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