Moody's upgrades Vishay

Moody's Investors Service said it upgraded Vishay Intertechnology, Inc.'s corporate family and probability of default ratings to Ba3 from B1, 3.625% convertible subordinated notes to B2 (LGD6, 97%) from B3 (LGD6, 97%) and speculative-grade liquidity rating to SGL-1 from SGL-2.

The outlook was changed to positive from stable.

The agency said the upgrade reflects Vishay's strong credit metrics driven by its solid operating performance resulting from good business execution and a strong rebound in revenues in the first half of 2010, led by a recovery in product demand.

Moody's said the Ba3 corporate family rating reflects Vishay's good operating scale, diverse product portfolio and low financial risk, including very good liquidity and strong free cash flow generation, which partially offset the risks of high demand and price volatility endemic in the semiconductor industry, particularly in mature products.

The positive outlook considers potential for further ratings momentum through improved free cash flow generation and deleveraging driven by organic EBITDA growth and a disciplined acquisition strategy, the agency said.

Moody's estimates that Vishay's debt-to-EBITDA ratio is about 1.6 times.

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