U.S.-based silicone and quartz producer Momentive Performance Materials Inc. (MPM) plans to issue $450 million of senior secured notes for refinancing. We are assigning a 'B-' issue rating and a recovery rating of '4' to these notes and affirming all but one of our other ratings on MPM, including the 'B-' corporate credit rating. Based on the proposed change in the capital structure and our updated recovery analysis, we are placing our 'B' ratings on the company's senior secured credit facilities on CreditWatch with positive implications. Although the proposed refinancing would strengthen liquidity, lengthen debt maturities, and ease covenant pressures, the negative outlook indicates that earnings and cash flow may not recover to the extent we anticipate during the next
