S&P cuts Goodyear

Standard & Poor's said it lowered its corporate credit rating on Goodyear Tire & Rubber Co. to B+ from BB- and removed it from CreditWatch, where it was placed Dec. 11, 2003. Other ratings were also lowered and removed from CreditWatch, including the $1.3 billion senior secured debt to BB from BB+, $650 million senior secured term loan to B from B+, and CHF158 million senior secured notes to B from B+.

S&P said the rating for Goodyear Dunlop Tires Europe BV's $650 million senior secured debt was lowered to B+ from BB-.

The outlook is stable.

S&P said the downgrade reflects S&P's view that the weak, albeit improving, operating performance of the company's North American tire operations, along with Goodyear's heavy schedule of debt maturities, pension funding, and other cash obligations during the next few years, will support a financial profile consistent with the now-lower rating.

Although credit protection measures are stretched for the rating, they are expected to gradually improve, and liquidity remains adequate.

The B+ rating on Goodyear's $680 million U.S. revolving credit facility is affirmed and the recovery rating is raised to 2 from 3, following the reduction of the facility size and the pay-off of the company's U.S. term loan, which shared collateral with the revolving credit facility.

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