Moody's upgrades ON Semi

Moody's Investors Service said it upgraded ON Semiconductor Corp.'s corporate family and probability-of-default ratings to Ba3 from B1 and assigned an SGL-1 rating.

The agency upgraded the issuer's $25 million guaranteed senior secured revolving credit facility due 2013 to Baa3 (LGD1, 3%) from Ba1 (LGD1, 4%) and $173.7 million guaranteed senior secured term loan due 2013 to Baa3 (LGD1, 3%) from Ba1 (LGD1, 4%).

The outlook is stable. This concludes the review for upgrade that began in December following the company's announcement that it would acquire AMI Semiconductor, Inc. for $915 million in an all-stock deal.

According to Moody's, the upgrade reflects ON Semi's enhanced scale, expanded product portfolio, broader and deeper client relationships, end market diversification and expansion into higher margin market segments.

The Ba3 rating reflects expectations that the company will realize manufacturing efficiency improvements, better operating execution and lower unit production costs, Moody's said.

The rating also considers possible delays in achieving acquisition synergies and risks associated with the timing and amount of restructuring charges, the agency noted.

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