The Week That Was

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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