In new issuance this week, we saw a mixed bag with one large deal, one small deal, and an exchange and new placement with existing convertible bondholders. The large deal was Microchip Technology (MCHP). The company announced a $1.0 billion senior subordinated convertible deal on Wednesday, which was later upsized to $1.5 billion. Proceeds will be used to retire portions of two existing classes of indebtedness. MCHP is a leading developer, manufacturer, and marketer of specialized semiconductor products used in a wide array of embedded control applications. The HOCS slash line for the deal measured a so-so 52 Overall / 47 Growth / 60 Safety, not a great score for a new issue. However, the robust safety score is attractive and justified due to the company's solid, defensible, and ultimately, highly profitable business model. The convertible should be attractive to long-only accounts for those same reasons.
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