Freescale IPO Cuts Default Odds

Offering gives the company $4.4 bln equity cushion

Creditors of Freescale Semiconductor Holdings are growing more confident the target of the largest semiconductor buyout will avoid default after its initial public offering gave bondholders a $4.4 billion equity cushion.

Credit-default swaps on the company, which two months ago priced in a 46 percent chance of default, now imply 35 percent, after the largest supplier of chips to the U.S. automotive industry sold $783 million of equity on May 25, according to data compiled by Bloomberg. Freescale’s most active bonds trade above face value.

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