Fitch lowers Goodyear, rates notes B

Fitch Ratings said it downgraded Goodyear Tire & Rubber Co.'s issuer default rating to B+ from BB- and its senior unsecured debt to B/RR5 from B+ and assigned a B/RR5 rating to its new $1 billion senior unsecured notes.

The agency also affirmed Goodyear's $1.5 billion first-lien credit facility and $1.2 billion second-lien term loan at BB+/RR1 and Goodyear Dunlop Tires Europe BV's €505 million European secured credit facilities at BB+/RR1.

The outlook is negative.

Fitch said the downgrades reflect the impact that the weak global economy and auto industry will have on Goodyear's profitability throughout 2009 and possibly into 2010; the agency's expectations for negative free cash flow this year and possibly next; higher debt levels, in part to maintain an adequate liquidity position; and a substantial increase in the debt-to-EBITDA ratio to 6.5 times as of March 31 from 3.5 times at the end of 2008.

Factors supporting the ratings include Goodyear's adequate liquidity position, cost-reduction actions, reduced OPEB liabilities, global diversification and a focused marketing strategy that has helped improve brand strength and revenues per tire, the agency said.

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