Oversupply and anemic global economic conditions will likely cause Albany, N.Y.-based silicone and quartz producer Momentive Performance Materials Inc.'s (MPM) earnings and cash flow to remain weaker than we previously expected. Consequently, we think covenant cushions will shrink, and we are revising our liquidity assessment to 'weak' from 'adequate'. We are lowering all our ratings on MPM by two notches, including the corporate credit rating to 'CCC' from 'B-'. The negative outlook reflects our view that the company's capital structure is unsustainable at the current earnings level, increasing the likelihood of another downgrade during the next few quarters. On Aug. 13, 2012, Standard&Poor's Ratings Services lowered all of its ratings on MPM by two notches, including the corporate
