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By clicking “I AGREE” [at the end of this document], you indicate that you understand and intend these terms and conditions to be the legal equivalent of a signed, written contract and equally binding, and that you accept such terms and conditions as a condition of viewing any and all Moody’s inform​ation that becomes accessible to you [after clicking “I AGREE”] (the “Information”).   References herein to “Moody’s” include Moody’s Corporation, Inc. and each of its subsidiaries and affiliates.

 

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2.            You acknowledge and agree that Moody’s credit ratings: (i) are current opinions of the future relative creditworthiness of securities and address no other risk; and (ii) are not statements of current or historical fact or recommendations to purchase, hold or sell particular securities.  Moody’s credit ratings and publications are not intended for retail investors, and it would be reckless and inappropriate for retail investors to use Moody’s credit ratings and publications when making an investment decision.  No warranty, express or implied, as the accuracy, timeliness, completeness, merchantability or fitness for any particular purpose of any Moody’s credit rating is given or made by Moody’s in any form whatsoever.          

 

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Announcement:

Moody's changes Momentive Performance's outlook to stable

21 Nov 2011

New York, November 21, 2011 -- Moody's Investors Service changed the rating outlook for Momentive Performance Materials Inc. (MPM) to stable from positive reflecting the third quarter decline in sales volumes and expectations that performance over the next year is likely to be constrained by weaker volumes and margins. Moody's also affirmed the company's other ratings (Corporate Family Rating at B3), and adjusted the LGD assessments on the outstanding debt.

"The impact of softening demand and high raw material prices has disrupted the trajectory of improving fundamentals, and will result in an acceleration of cost reduction activities," stated John Rogers, Senior Vice President at Moody's.

RATINGS RATIONALE

Moody's stable outlook reflects the favorable maturity schedule (subsequent to the February 2011 credit agreement amendment) and good liquidity position, as well as the expectation that there will be some additional integration/cost reduction charges. Moreover, Moody's expects that softening demand will pressure performance such that EBITDA will remain below $90 million/quarter for several quarters. However, if MPM can reverse this negative trend in 2012, sustainably generate FCF/debt above 4% and RCF/Debt above 8%, Moody's would consider the appropriateness of a higher rating. As part of that process, Moody's would look for more progress in addressing upcoming maturities through 2015 and its ability to refinancing its HoldCo debt (at September 30, 2011, this PIK debt had a value of $663 million and is accreting at 11% per year). Conversely, if the company's financial performance does not improve from third quarter 2011 levels in 2012 or cash and revolver availability falls, or appears likely to fall, significantly below $200 million for a sustained period, the B3 CFR would come under pressure.

The B3 Corporate Family Rating (CFR) continues to be constrained by MPM's elevated leverage and weak credit metrics, which outweigh its strong business profile and improved maturity schedule. As a result of the softening demand and high raw materials prices, the 2011 operating performance will underperform that of 2010 and will challenge credit metrics more than previously expected. Year end 2011 is anticipated to conclude with Net Debt/EBITDA over 8.0x and Retained Cash Flow/Net Debt under 5%. The aforementioned ratios reflect Moody's Global Standard Adjustments, which include the capitalization of pensions and operating leases, as well as MPM's HoldCo PIK debt ($682 million at year end 2011). Moody's also noted that MPM's parent company Momentive Performance Materials Holdings LLC has filed a registration statement with the SEC for an initial public offering. If IPO proceeds were used to repay a significant amount of debt (>$600 million) this could also positively impact the company's credit rating.

MPM's good liquidity is supported by the company's cash balance of $250 million and the expectation for positive free cash flow generation over the next four quarters. Maturities of long term debt will become a greater concern by the end of 2012; maturities are $215 million in 2013, $300 million in 2014, and $840 million in 2015.

Ratings affirmed:

Momentive Performance Materials Inc.

Corporate Family Rating at B3

Probability of Default Rating at B3

Speculative grade liquidity rating at SGL-2

Guaranteed senior secured term loan due 2013 at Ba3 (LGD2, 12%)

Guaranteed senior secured revolver due 2014 at Ba3 (LGD2, 12%)

Guaranteed senior secured term loan due 2015 at Ba3 (LGD2, 12%)

Guaranteed senior secured 2nd lien notes due 2014 to B2 (LGD3, 35%) from B2 (LGD3, 37%)

Guaranteed senior unsecured notes due 2021 to Caa1 (LGD4, 58%) from Caa1 (LGD4, 60%)

Senior subordinated notes due 2016 to Caa2 (LGD5, 85%) from Caa2 (LGD5, 86%)

Please see ratings tab on the issuer/entity page on Moodys.com for the last credit rating action and the rating history.

The principal methodology used in rating Momentive was the Global Chemical Industry Methodology published December 2009. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.

Momentive Performance Materials Inc., headquartered in Albany, New York, is the second largest producer of silicones and silicone derivatives worldwide. The company has two divisions: silicones (which accounted for >90% of revenues) and quartz. Silicones, or more accurately polymerized siloxanes or polysiloxanes, are mixed inorganic-organic polymers that are used in a wide variety of industrial and consumer applications including agriculture, automotive, electronics, healthcare, paper , personal care, textiles and sealants (the most recognizable application is for bathroom, kitchen and window sealants around the home). Revenues in for the LTM ending September 30, 2011 were $2.7 billion.

Momentive Performance Materials Inc. is an indirect wholly-owned subsidiary of Momentive Performance Materials Holdings LLC (MPMH), headquartered in Columbus Ohio. An affiliate of Apollo Management is the majority owner of MPMH.

REGULATORY DISCLOSURES

The Global Scale Credit Ratings on this press release that are issued by one of Moody's affiliates outside the EU are considered EU Qualified by Extension and therefore available for regulatory use in the EU. Further information on the EU endorsement status and on the Moody's office that has issued a particular Credit Rating is available on www.moodys.com.

For ratings issued on a program, series or category/class of debt, this announcement provides relevant regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides relevant regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides relevant regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

Information sources used to prepare the rating are the following: parties involved in the ratings, parties not involved in the ratings, public information, and confidential and proprietary Moody's Investors Service information.

Moody's considers the quality of information available on the rated entity, obligation or credit satisfactory for the purposes of issuing a rating.

Moody's adopts all necessary measures so that the information it uses in assigning a rating is of sufficient quality and from sources Moody's considers to be reliable including, when appropriate, independent third-party sources. However, Moody's is not an auditor and cannot in every instance independently verify or validate information received in the rating process.

Please see Moody's Rating Symbols and Definitions on the Rating Process page on www.moodys.com for further information on the meaning of each rating category and the definition of default and recovery.

Please see ratings tab on the issuer/entity page on www.moodys.com for the last rating action and the rating history.

The date on which some ratings were first released goes back to a time before Moody's ratings were fully digitized and accurate data may not be available. Consequently, Moody's provides a date that it believes is the most reliable and accurate based on the information that is available to it. Please see the ratings disclosure page on our website www.moodys.com for further information.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

John Rogers
Senior Vice President
Corporate Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Steven Wood
MD - Corporate Finance
Corporate Finance Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's changes Momentive Performance's outlook to stable
No Related Data.
© 2021 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.

CREDIT RATINGS ISSUED BY MOODY'S CREDIT RATINGS AFFILIATES ARE THEIR CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MATERIALS, PRODUCTS, SERVICES AND INFORMATION PUBLISHED BY MOODY’S (COLLECTIVELY, “PUBLICATIONS”) MAY INCLUDE SUCH CURRENT OPINIONS. MOODY’S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE APPLICABLE MOODY’S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY’S CREDIT RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS, NON-CREDIT ASSESSMENTS (“ASSESSMENTS”), AND OTHER OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY’S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. AND/OR ITS AFFILIATES. MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS, ASSESSMENTS AND OTHER OPINIONS AND PUBLISHES ITS PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.

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MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any credit rating, agreed to pay to MJKK or MSFJ (as applicable) for credit ratings opinions and services rendered by it fees ranging from JPY125,000 to approximately JPY550,000,000.

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​
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