Mentor may no longer be providing a Lite edition of the IA-32 bare-metal toolchain, but I'm pretty sure it's still supported in the commercial editions, and a basic license is not that expensive.
As Chris says, the Newlib licensing page is a bit complicated -- but the gist of it is that basically all of it that you need for a bare-metal system is BSD licensed; IIRC, the parts that are GPL-licensed are clearly-delineated system-specific pieces that reference things in the Linux kernel or the like (and thus have to be GPL-licensed), and those aren't included in the bare-metal builds. I think they're even all in one or two distinct directories that you can just delete. Obviously you should do the analysis for yourself, but that's the result you should expect to find.
A shortcut that may be useful: The download page for the most recent version of CodeBench Lite for IA-32 ELF that was produced is on this page. If you download the source tarball from there, you'll get the Newlib sources that were used to build that, and there's also a .sh
file in the package indicating how it was configured and built. You'll note that in the documentation (licenses are in the back of the Getting Started Guide) the Newlib binaries are simply listed as BSD-licensed, so this should show you how Mentor got a compiled library that fits that licensing description.
(Disclaimer: I used to work for Mentor until recently.)