S&P affirms Microchip Technology

S&P said it affirmed its unsolicited BB corporate credit rating on Microchip Technology Inc.

The outlook is stable.

In addition, the agency affirmed its unsolicited BB+ issue-level rating on the company's senior secured revolving credit facility. The unsolicited recovery rating remains 2, which indicates an expectation of substantial (70% to 90%; rounded estimate: 80%) recovery in the event of payment default.

At the same time, the agency affirmed the unsolicited B+ issue-level ratings on the company's senior subordinated convertible notes and junior subordinated convertible notes. The recovery rating remains 6, which indicates an expectation of negligible (0% to 10%; rounded estimate: 0%) recovery.

S&P said the affirmation reflects the company's good operating performance over the past year with adjusted EBITDA margin expansion to the high-30% area at Dec. 31 from the low-30% area, and free operating cash flow generation of over $1 billion leading to deleveraging to about 2x.

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