Moody’s Investors Service downgraded the ratings of The Goodyear Tire & Rubber Company including the corporate family and probability of default ratings to Ba3 from Ba2, and Ba3-PD from Ba2-PD, respectively.
In a related action, Moody’s downgraded Goodyear’s senior secured second-lien term loan, to Ba1 from Baa3; senior unsecured guaranteed notes to B1 from Ba3, senior unsecured unguaranteed notes to B2 from B1; and on Goodyear Europe B.V.’s senior unsecured guaranteed notes to Ba2 from Ba1. The Speculative Grade Liquidity Rating is downgraded to SGL-3 from SGL-2. The rating outlook is stable.
Moody’s says the downgrade reflects its view that the company’s pricing actions, rationalisation initiatives in Germany and other cost savings programs initiated to help mitigate ongoing elevated raw material cost pressures could be effective over the longer term, but are unlikely to restore debt/EBITDA to below three times, or EBITA/Interest to above three times, over the intermediate term. Moody’s says it believes these actions will help mitigate raw material cost headwinds of approximately $300 million expected by Goodyear in 2019.