Moody's rates Goodyear term loan B1

Moody's Investors Service said it assigned a B1 rating to Goodyear Tire & Rubber Co.'s proposed $650 million asset-backed term loan. At the same time, the rating agency confirmed Goodyear's existing senior implied rating at B1, senior secured bank facilities at Ba3, senior unsecured long-term issuer rating at B2 and the senior unsecured rating at B2.

The outlook remains stable.

The stable outlook incorporates the improved liquidity impact of the proposed term loan, the benefits from the recent labor agreement and the positive trend in North American replacement tire volumes. The outlook also anticipates continued improvement in revenue-per-tire, more global sourcing and cost savings from rationalization initiatives such as the closing of the Huntsville plant.

Despite the current rating and stable rating outlook, Moody's noted that Goodyear faces several challenges in the near term. Delays or difficulties in extending the 2005 bank maturities would raise concerns despite Goodyear's strong cash position.

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