S&P: ON Semiconductor convertibles, revolver BB+

Standard & Poor’s said it assigned a BB+ rating and 3 recovery rating to ON Semiconductor Corp.’s proposed $600 million convertible notes due 2020 and $1 billion revolving credit facility due 2020.

The 3 recovery rating indicates 50% to 70% expected default recovery.

ON Semiconductor will be the borrower of the notes and Semiconductor Components Industries LLC, the operating subsidiary, will be the issuer of the revolving credit facility.

S&P also said it lowered the rating on the company’s subordinated convertible notes to BB- from BB+ and revised the recovery rating to 6 from 3.

The 6 recovery rating indicates 0 to 10% expected default recovery.

The downgrade reflects the issuance of the new convertible notes, which are senior to the subordinated convertible notes, S&P said.

The company’s BB+ corporate credit rating and stable outlook are unchanged.

Although the new notes are structurally subordinated to the revolving credit facility, they will be guaranteed by Semiconductor Components and all of the guarantors of the revolving credit facility, so these instruments are expected to rank equally in a default scenario, S&P said.

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