Research Update: Momentive Performance Materials Inc. Upgraded To 'B+' From 'B' On Strong Earnings, Outlook Stable; Debt Rating Raised

We expect that the current global economic recovery, in conjunction with stronger siloxane pricing, robust demand in Momentive Performance Materials Inc.'s key end markets, and the addition of KCC Corp.'s Silicones business, will lead to substantial EBITDA growth and improved credit metrics in 2021 compared with our previous forecast. As a result, S&P Global Ratings raised its issuer credit rating on the company to 'B+' from 'B'. The outlook is stable. In line with this rating action, we raised our issue-level rating on the company's senior secured term loan to 'B+' from 'B'. Our '3' recovery rating is unchanged, indicating our expectation for meaningful (50%-70%; rounded estimate: 60%) recovery in the event of a payment default. The stable outlook reflects

...+ We expect that the current global economic recovery, in conjunction with stronger siloxane pricing, robust demand in Momentive Performance Materials Inc.'s key end markets, and the addition of KCC Corp.'s Silicones business, will lead to substantial EBITDA growth and improved credit metrics in 2021 compared with our previous forecast. + As a result, S&P Global Ratings raised its issuer credit rating on the company to 'B+' from 'B'. The outlook is stable. + In line with this rating action, we raised our issue-level rating on the company's senior secured term loan to 'B+' from 'B'. Our '3' recovery rating is unchanged, indicating our expectation for meaningful (50%-70%; rounded estimate: 60%) recovery in the event of a payment default. + The stable outlook reflects our view that S&P Global Ratings-adjusted credit metrics will improve substantially over the course of 2021, with funds from operations (FFO) to debt improving to above 12% by year end, up from the mid-single digits in 2020....

Research Update