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Bond Market News
Goodyear Downgraded to B+ from BB-
November 29, 2023
Goodyear was downgraded to B+ from BB- by S&P. The rating agency believes that Goodyear’s recent strategic initiatives, while a positive step, may lead to significant restructuring costs and “take an extended period of time”. Goodyear had announced steps including asset sales, restructuring and mix optimization over the next two years to help improve profitability and pay off its debts. However, S&P notes that during this period, Goodyear’s margins will be lower and free operating cash flow (FOCF) will remain negative. S&P expects EBITDA margins of only 7.9% in 2023 vs. to 10.6% in 2022 and 12.7% in 2021. Restructuring costs are set to hit $1.1bn over the next two years. On the positive side, S&P notes that Goodyear has “sufficient liquidity” to sustain increased restructuring costs and capital spending.
Goodyear’s bonds were trading weaker with its 4.875% 2027s down 0.4 points to 94.75, yielding 6.68%.
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