Moody's drops Momentive CFR, notes

Moody's Investors Service said it lowered Momentive Performance Materials Inc.'s corporate family rating to Caa2 from Caa1 and affirmed its Caa1-PD probability of default rating.

These actions reflect ongoing weak financial performance and liquidity as well as Moody's opinion that potential losses for debtholders have increased due to the extended downturn in the company's end markets.

At the same time, the agency lowered the company's senior secured first-lien notes to B3 from B1, the senior secured 11/2-lien notes to Caa1 from B2 and the springing-lien notes to Caa2 from Caa1.

Momentive's senior subordinated note rating was affirmed at Caa3. The speculative grade liquidity rating was lowered to SGL-4 from SGL-3 due to the reduction in the company's available liquidity.

"Although Momentive's financial performance continues to improve on a quarter over quarter basis, it is still not profitable enough to cover its cash costs," Moody's senior vice president John Rogers said in a news release.

"This extended downturn in its end markets will likely force management to resort to asset sales or other extraordinary measures to maintain a reasonable amount of liquidity and avoid a distressed restructuring."

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