Moody's rates Hughes Network loan B1

Moody's Investors Service said it assigned a B1 rating with a loss-given-default assessment of LGD4 (53%) to Hughes Network Systems, LLC's proposed $115 million senior unsecured term loan due 2014, of which HNS Finance Corp. will be a co-issuer.

The agency also affirmed the corporate family and probability-of-default ratings at B1, the $50 million senior secured revolving credit facility at Ba1 (LGD1, 1%) and the $450 million 9½% senior notes due 2014 at B1 (LGD4, 53%).

The outlook is stable.

The proceeds from the new term loan will be used primarily to fund capital expenditures and for general corporate purposes.

Hughes Network's ratings broadly reflect Moody's expectations for negative free cash flow due to capital spending and delays associated with the company's Spaceway 3 satellite, continuing challenges from terrestrial-based competition and relatively low margins, offset by a modest debt-to-EBTIDA ratio of about 5x and good interest coverage at more than 2.5x.

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