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S&P ups Sirius XM Radio
Standard & Poor's said it raised the corporate credit rating on Sirius XM Radio Inc. and its subsidiaries, XM Satellite Radio Holdings Inc. and XM Satellite Radio Inc., to B+ from B.
The ratings were removed from CreditWatch, where they were placed in September with positive implications.
The outlook is stable.
The upgrade was based on the company's improving operating performance, declining debt leverage and the prospects for continued improvement in credit measures for full-year 2010 and 2011, S&P said.
The agency also said it assigned to XM Satellite Radio's proposed $700 million senior unsecured notes due 2018 a B+ rating, which is at the same level as the corporate credit rating, with a recovery rating of 4, indicating 30% to 50% expected recovery in a default.
The company plans to use proceeds to back the tender offer for XM's $526 million 11¼% senior secured notes due June 15, 2013.
The recovery rating on XM Satellite Radio's existing unsecured debt was revised to 4 from 6. The rating on this debt was raised to B+ from CCC+. The recovery rating revision reflects the planned refinancing of the secured debt in XM's capital structure, S&P said.
The agency also said it also revised the recovery rating on Sirius XM's unsecured debt to 3, indicating 50% to 70% expected recovery in a default, from 4. The rating was raised to B+ from B. The revision of the recovery rating is based on improved operating trends, the agency said.
The ratings reflect Sirius XM's high debt leverage and dependence on weak U.S. automotive sales, S&P said.
The company's position as the only U.S. satellite radio operator, integration-related operating synergies and cost savings arising from the 2008 acquisition of XM Satellite Radio Holdings are modest positives that do not offset these risks, the agency said.
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