World's second-largest producer in the highly concentrated silicones market, with strong diversification by customers, products, and regions; Good long-term growth prospects for silicones; and Reasonable liquidity, including a covenant-light bank loan. Very high debt leverage; Concerns about the company's ability to generate positive free operating cash flow in the current economic environment; Some vulnerability to raw material cost fluctuations; and Modest long-term deleveraging potential. The rating on silicones and quartz producer Momentive Performance Materials Inc. reflects its satisfactory business risk profile as a leading global silicones producer, tempered by its very high debt leverage since Apollo Management's December 2006 acquisition of 90% of the company from General Electric Co. (GE) for $3.9 billion. Albany, N.Y.-based Momentive is the world's second-largest
