Moody's rates Goodyear notes Ba2, loan Baa3

Moody's Investors Service said it assigned a Ba2 (LGD2, 27%) rating to Goodyear Tire & Rubber Co.'s new senior €250 million of notes due April 2019 to be issued by Goodyear Dunlop Tire Europe BV and a Baa3 (LGD1, 5%) rating to Goodyear Dunlop's amended and extended €400 million of first-lien revolving credit facilities due April 2016.

The outlook is stable.

The net proceeds from the new notes will be used to repay borrowings under Goodyear Dunlop's revolving credit facility and general corporate purposes.

Moody's affirmed Goodyear's corporate family rating at Ba3, speculative-grade liquidity rating at SGL-2, $1.5 billion first-lien revolving credit facility due 2013 at Baa3 (LGD1, 5%), $1.2 billion second-lien term loan due 2014 at Ba1 (LGD2, 16%), 7% senior notes due 2028 at B2 (LGD6, 96%) and 10½% notes due 2016, 8¾% senior guaranteed notes due 2020 and 8¼% senior guaranteed notes due 2020 at B1 (LGD4, 66%).

Moody's affirmed Goodyear Dunlop's €505 million of first-lien revolving credit facilities due 2012 at Baa3 (LGD1, 6%).

The ratings on Goodyear reflect the company's ability to maintain its competitive position within the global tire industry while simultaneously taking actions to mitigate rising raw material costs, primarily rubber, the agency said.

Goodyear's stable rating outlook reflects the expectation that global tire volumes will continue to recover in 2011 driven by higher replacement and original equipment tire demand, despite near-term potential market disruptions from the earthquake in Japan, the agency added.

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