S&P lifts Goodyear to positive

Standard & Poor's said it revised the outlook on the Goodyear Tire & Rubber Co. to positive from stable and affirmed its BB- corporate credit rating.

The agency also said it affirmed the BB+ rating and 1 recovery rating on the company's €400 million euro revolving credit facility due 2016.

The 1 recovery rating indicates 90% to 100% expected default recovery.

S&P also said it affirmed the BB rating and 2 recovery rating, which indicates 70% to 90% expected default recovery, on Goodyear's $1.2 billion term loan and Goodyear Dunlop Tires Europe BV's €250 million senior unsecured notes due 2019.

The agency also said it affirmed the B+ rating and 5 recovery rating, which indicates 10% to 30% expected default recovery, on Goodyear's other senior unsecured debt.

The revised outlook reflects an expectation for an at least a one-in-three chance of an upgrade of Goodyear during the next 12 months, said Lawrence Orlowski, an S&P analyst.

Goodyear has fully funded its U.S. pension plans, Orlowski said in a press release, and they will be frozen April 30. The immediate effect is an improved number of debt-based financial metrics, including debt-to-EBITDA of 2.9x and free operating cash flow-to-debt of 7% for 2014, the agency said.

S&P said it still assesses Goodyear's financial risk profile as aggressive, given the potential volatility in the company's credit metrics and relatively weak free cash flow.

But, the company's credit measures could continue to improve and support a higher rating over the next 12 months, the agency said.

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