Moody's downgrades Goodyear Tire

Moody's Investors Service said it downgraded Goodyear Tire & Rubber Co.'s corporate family rating to Ba3 from Ba2 and probability of default rating to Ba3-PD from Ba2-PD.

Moody's also said it downgraded Goodyear's senior secured second-lien term loan to Ba1 from Baa3, senior unsecured guaranteed notes to B1 from Ba3 and senior unsecured unguaranteed notes to B2 from B1.

Goodyear Europe BV's senior unsecured guaranteed notes also were downgraded to Ba2 from Ba1.

The speculative grade liquidity rating also was downgraded to SGL-3 from SGL-2.

The outlook is stable.

The downgrades consider the company's pricing actions, rationalization initiatives in Germany and other cost savings programs that helped mitigate ongoing elevated raw material cost pressures, but are not likely to restore the company's leverage to less than 3x, Moody's said.

The agency said it believes these actions will help mitigate raw material cost headwinds of about $300 million expected by Goodyear in 2019, the agency said.

Other industry pressures include a slowdown in global automotive original equipment manufacturer sales and industry expectations of flattish replacement tire volumes in the United States, Moody's said.

The ratings will continue to be supported by the company's strong global competitive position in the automotive aftermarket and longstanding customer relationships with automotive original equipment manufacturers, Moody's said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.