Moody’s rates Microchip Ba1, facilities Baa3

Moody's Investors Service said it assigned Microchip Technology Inc. a Ba1 corporate family rating, Ba1-PD probability of default rating, Baa3 ratings to its senior secured credit revolver and term loan and SGL-1 speculative grade liquidity.

Debt proceeds will be used to fund the acquisition of Microsemi Corp.

The outlook is stable.

Moody’s said the Ba1 corporate family rating reflects Microchip's leading position as a provider of microcontroller, analog, mixed signal, and specialized semiconductor solutions.

“Moody's expects revenue growth in the high single digits, driven by GDP-based growth plus share gains and semiconductor content growth,” the agency said in a news release.

“Microchip's credit profile benefits from its broad diversification by product, process, end market, customer, and geography.

“Given the company's broad product portfolio and long product cycles of primarily proprietary products, gross margins should remain in the low 60 percent range with EBITDA margins sustained at the high 30% to low 40% level.”

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