S&P gives BB to Sirius XM Radio notes

Standard & Poor's said it assigned Sirius XM Radio Inc.'s proposed issuance of $600 million senior notes due 2021 an issue-level rating of BB, with a recovery rating of 3. The 3 recovery rating indicates an expectation of meaningful (50% to 70%) recovery in the event of a payment default.

Sirius plans to use the net proceeds, together with some of its existing cash, to redeem $753 million 8æ% senior notes due 2015.

The rating on Sirius XM Radio incorporates S&P's expectation that leverage will not increase above the agency's 4.5x threshold for the company at this rating, despite moves to boost shareholder returns, because of the company's good operating outlook and growing discretionary cash flow.

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