S&P upgrades ASM

Standard & Poor's said it raised the long-term corporate credit rating on ASM International NV to BB- from B+.

The outlook is stable.

The agency also said it affirmed the rating on the group's outstanding €150 million convertible bond due 2014 at BB- and lowered the recovery rating to 3, indicating 50% to 70% expected recovery in a default, from 2.

The upgrade reflects the significantly improved profitability and cash flow generation at ASM's front-end operations in 2010, thanks to completion of its restructuring program and solid demand prospects across the semiconductor industry, S&P said.

The upgrade also reflects the group's better capitalization and the strong operating performance and solid demand prospects of its 52%-owned Hong Kong subsidiary, ASM Pacific Technology Ltd., the agency said.

The ratings are constrained by the cyclical and competitive nature of the industry, substantial technology risks and the group's concentrated customer base, S&P said.

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