S&P rates Sirius XM loan BBB-

Standard & Poor's said it assigned a BBB- rating with a recovery rating of 1 to Sirius XM Radio Inc.'s $1.25 billion senior secured revolving credit facility due 2017.

The 1 recovery rating reflects 90% to 100% expected default recovery.

The BB rating on the company's senior unsecured debt with a recovery rating of 3 and BB rating on its subordinated debt with a recovery rating of 4 are not affected by the proposed addition of secured debt in the capital structure. That is based on an expectation of slightly better creditor recovery prospects, given consistent subscriber additions and stable churn, despite price increases, S&P said.

Sirius announced a special dividend of about $325 million payable Dec. 28, which will reduce excess cash balances, and announced a $2 billion common stock-repurchase program.

The agency said it expects Sirius XM to fund the share-repurchase program through discretionary cash flow and periodic borrowings under its revolving credit facility.

The ratings incorporate an expectation that leverage will not increase above the 4.5x target - despite the announcement of these moves to boost shareholder returns - because of its good operating outlook and growing discretionary cash flow, S&P said.

The ratings also consider the company's relative stability, dependence on U.S. auto sales and consumer discretionary spending for growth and its longer-term exposure to competition from alternative media, the agency said.

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