A family of Microsoft word processing software products for creating web, email, and print documents.
The \* Charformat switch causes a field to format its results in whatever font properties are applied to the first character in the field. Did you apply such formatting to at least the 'M' of the mailmerge field's 'MERGEFIELD' parameter? Changing formats in the source file will not help.
Without the \* Charformat switch, the field will ordinarily display its output in the underlying paragraph Style used in the document. If you've overridden that Style with hard formatting, the format you've applied may not 'hold' for the field through the merge - you should update the Style instead.