Fitch upgrades NXP

Fitch Ratings said it upgraded NXP Semiconductors NV's long-term issuer default rating to BBB+ from BBB and raised the long-term IDR and senior unsecured ratings on NXP's wholly-owned subsidiaries and co-issuers, NXP BV, NXP Funding LLC and NXP USA, Inc., to BBB+ from BBB.

The outlook is stable.

“The ratings and outlook reflect NXP's more conservative financial policies, including stronger than previously expected leverage metrics and higher cash balances, while limiting share repurchases to annual FCF. NXP's public net leverage target is 2x, but Fitch forecasts this metric below 1.5x, which translates to gross EBITDA leverage below Fitch's 2x positive rating sensitivity. FCF has strengthened, providing sufficient capacity for tuck-in acquisitions and share repurchases.

“Meanwhile, Fitch expects NXP to continue benefitting from content growth and share gains in core automotive and industrial markets even as demand softens over the near term,” the agency said in a statement.

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