S&P: Intelsat cut to negative, Zeus notes rated B

Standard & Poor's said it assigned its B rating to Zeus Special Subsidiary Ltd.'s senior discount notes due 2015, which will initially yield $300 million of net proceeds. Parent Intelsat Ltd. will be the co-obligor.

The outlook on Intelsat was revised to negative from stable. Ratings on the company (including the BB- corporate credit rating) and its affiliates were affirmed.

Also affirmed were Intelsat Ltd.'s B rated senior unsecured debt and Intelsat Bermuda Ltd.'s BB+ rated $650 million secured bank loan and B+ rated $2.55 billion unsecured notes due 2012.

S&P said the outlook revision is a direct result of the proposed note issue. The revision reflects not only the increase in absolute debt, but also a shift to a somewhat more aggressive financial policy.

The new notes will be used to repay preferred stock issued by Intelsat's 100% owner, Zeus Holdings Ltd.

Upon FCC approval, the senior discount notes will become an obligation of Intelsat Bermuda Ltd. and the $650 million credit facility and $2.55 billion of senior unsecured notes that currently reside at Intelsat Bermuda Ltd. will become obligations of the newly created Intelsat Subsidiary Holding Co. Ltd.

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