Standard & Poor's Corp. said Friday it has lowered its long-term corporate credit rating on Japanese tire maker Bridgestone Corp. to BBB plus from A minus and removed the rating from CreditWatch, where it was placed Aug. 9.
The outlook on the rating is negative, it added.
The U.S. credit-rating agency also said it has affirmed its A-2 short-term corporate credit rating on Bridgestone and its commercial paper rating on Bridgestone's U.S. subsidiary Bridgestone/Firestone Inc. The short-term ratings had not been on CreditWatch.
"The downgrade reflects the significant challenges the Bridgestone group faces in restoring profitability at Bridgestone/Firestone over the medium term, in light of the turmoil caused by a product recall," it said.
In August, Bridgestone/Firestone announced a recall of 6.5 million tires after over 100 traffic deaths allegedly caused by tread peeling off the tires. Most were mounted on Ford Motor Co.'s popular Explorer sport utility vehicle.
Given its strained relationship with Ford after the recall, Bridgestone/Firestone could see a gradual decline in its sales and market share, it said. over the next few years as new vehicle models replace older models, S&P said.
"Given lingering doubts among the public about the reliability of its tires, there is a risk that Bridgestone/Firestone might need to adopt significant price discounts or implement other marketing initiatives to solidify its market share," the agency said.
With your current subscription plan you can comment on stories. However, before writing your first comment, please create a display name in the Profile section of your subscriber account page.