S&P puts Sirius XM on positive watch

S&P said it placed its Sirius XM Radio Inc.’s ratings, including its BB issuer and issue-level rating on the company's unsecured debt on CreditWatch with positive implications. The BBB- senior secured rating is unchanged.

Liberty Media Corp. and Sirius XM Holdings Inc., the parent of Sirius XM Radio Inc., announced they agreed to combine the Liberty SiriusXM tracking stock group (LSXM) with Sirius XM to create a new public company.

The CreditWatch placement follows Liberty Media and Sirius XM's agreement to merge LSXM with Sirius XM. Sirius XM will assume LSXM's $575 million of 3.75% convertible notes due 2028, the agency said. It also secured $1.1 billion of committed financing to potentially refinance LSXM's of 2.75% exchangeable notes and the margin loan secured by Sirius XM's stock. The company could, however, seek alternate financing.

“We do not expect the incremental debt from the transaction to affect our existing 1 recovery rating on the company's senior secured debt or 4 recovery rating on the company's senior unsecured debt. If we raise the issuer credit rating on Sirius XM to BB+, we will also raise the issue-level rating on the company's senior unsecured debt to BB+ to align,” S&P said in a statement. Any upgrade would be limited at one notch.

The agency said it aims to resolve the positive watch once the deal closes, expected in early in the third quarter of 2024.

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