S&P rates Goodyear facility B+

Standard & Poor's said it assigned its B+ senior secured rating to the proposed $650 million senior secured term loan of Goodyear Tire & Rubber Co. (BB-/Watch negative/--) and placed the rating on the loan on CreditWatch with negative implications. A recovery rating of 3 was assigned to the new term loan.

S&P also said it lowered its senior secured rating on Goodyear's existing $1.3 billion U.S. bank facility and its $120 million 5.375% notes due 2006 to B+ from BB- because of reduced asset protection. The new $650 million term loan will be senior to the bank facility and the notes on certain collateral. A recovery rating of 3 was assigned to the $1.3 billion bank facility.

In addition, S&P lowered the company's senior unsecured rating to B from B+ because of the increase in secured debt. S&P assigned a 1 recovery rating to Goodyear's existing $1.3 billion asset-based loan facility and a 2 recovery rating to the company's existing $650 million European credit facility.

All existing corporate credit, senior secured, and unsecured ratings remain on CreditWatch with negative implications where they were placed on Dec. 11 following the company's announcement that an internal investigation has identified possible improper accounting issues in Europe.

S&P said the downgrade of Goodyear's $1.3 billion U.S. credit facility reflects the reduced asset protection that will result from the new term loan, despite the planned reduction in the size of the U.S. facility.

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