Moody’s gives Ba3 to Goodyear notes

Moody's Investors Service said it assigned a Ba3 rating to the proposed $700 million issuance of senior unsecured notes by Goodyear Tire & Rubber Co.

Net proceeds, together with current cash and cash equivalents, are expected to be used to redeem in full the $700 million of 7% senior unsecured notes due 2022 at a redemption price equal to 103.5% of the principal amount thereof, plus accrued interest.

The outlook is stable.

Moody's said it expects the current transaction will generate interest savings for Goodyear.

“This transaction follows debt refinancing, repricing, and debt paydown actions achieved in 2016, generating improved debt service costs,” the agency said in a news release.

Pro forma for Goodyear's contractual obligations and commitments for 2017, EBITA/interest is estimated at 4.35 times. (inclusive of Moody's standard adjustments) compared to an actual level of 3.8 times for 2016. The current transaction should further improve EBITA/interest on a pro forma basis, Moodys’ explained.

Debt/EBITDA at year-end 2016 was about 2.6 times.

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