Research Update: Momentive Performance Materials Inc. Rating Lowered On Challenging Operating Environment, Deteriorating Credit Metrics

Momentive Performance Materials Inc.'s (MPM) operating performance has deteriorated materially in recent quarters as a result of customer inventory destocking, weak underlying demand in key end markets, and siloxane market oversupply from recent capacity additions in Asia. While our prior rating action had assumed debt to EBITDA would rise above 6x in 2023 and that the company would generate modest free cash flow, we now forecast debt to EBITDA will approach double digits by year end. As a result of the challenging operating environment for silicones producers, which we believe will persist for the near future, we lowered all ratings including our issuer credit rating on MPM to 'B' from 'B+' and revised our outlook to negative from stable. The

...- Momentive Performance Materials Inc.'s (MPM) operating performance has deteriorated materially in recent quarters as a result of customer inventory destocking, weak underlying demand in key end markets, and siloxane market oversupply from recent capacity additions in Asia. - While our prior rating action had assumed debt to EBITDA would rise above 6x in 2023 and that the company would generate modest free cash flow, we now forecast debt to EBITDA will approach double digits by year end. - As a result of the challenging operating environment for silicones producers, which we believe will persist for the near future, we lowered all ratings including our issuer credit rating on MPM to 'B' from 'B+' and revised our outlook to negative from stable. - The negative outlook reflects our expectation that MPM's free cash flow and credit metrics will continue to be pressured in the near term as the company navigates a weak demand environment combined with increased siloxane supply from Asian producers,...

Research Update