Recovery Report: Momentive Specialty Chemicals Inc.'s Recovery Rating Profile Oct 10

Standard & Poors, October 2010

Abstract
U.S.-based chemical producer Momentive Specialty Chemicals Inc. (MSC) is issuing second-lien notes, which it will use to refinance about $533 million in existing second-lien notes and to pay related fees and expenses. We assigned a '5' recovery rating and 'CCC+' issue-level rating to the company's proposed $574 million notes due 2020. The transaction will extend the second-lien maturities to 2020 from 2014. Our simulated default scenario entails a payment default in 2013 because of weaker demand for MSC's products amid unexpected recessionary conditions. This would compress the company's margins to single digits from recently improved levels, resulting in severely constrained liquidity and covenant compliance challenges. We estimate gross recovery value to be about $1.77 billion based on a distressed emergence...

Companies mentioned in this report are: Momentive Specialty Chemicals Inc.,Hexion U.S. Finance Corp.,Hexion Nova Scotia Finance ULC,Momentive Performance Materials Inc.

Standard and Poors RatingsXpress Credit Research provides in-depth coverage of international corporates, financial institutions, insurance companies, utilities, sovereigns and structured finance programs. RatingsXpress Credit Research lets users determine the credit rating of holdings and identify key factors underlying an issuer's creditworthiness, distinguishes the different risk exposures for new and existing deals, and provides an understanding of how their analysts interpret key regulatory, political and environmental events and their economic impact.

Research Type: Full Analysis

Momentive Specialty Chemicals Inc.,Hexion U.S. Finance Corp.,Hexion Nova Scotia Finance ULC,Momentive Performance Materials Inc.

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