Moody's upgrades Microchip

Moody's Investors Service said it upgraded Microchip Technology Inc.'s senior unsecured rating to Baa3 from Ba2, its senior secured bank credit facility rating to Baa2 from Baa3 and its senior secured bond rating to Baa2 from Baa3.

The agency also withdrew Microchip's Ba1 corporate family rating, Ba1-PD probability of default rating and SGL-1 speculative grade liquidity rating. The outlook is positive.

“The upgrade and positive outlook reflect expectations that Microchip will continue to deleverage as it executes well and grows revenue, margins, and cash flow in a supply constrained environment. In addition to a robust business profile, the rating action is "supported by governance considerations, specifically a conservative leverage policy that targets net debt to EBITDA (company calculated) of 1.5x and our expectations for the maintenance of a strong liquidity profile and a balanced capital allocation policy over the longer term,” said Richard Lane, a Moody's senior vice president, in a press release.

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