S&P applies BB to Sirius XM notes

Standard & Poor's said it assigned its BB issue-level rating and 3H recovery rating to Sirius XM Radio Inc.'s proposed $750 million senior notes due 2025.

The 3H recovery rating indicates an expectation for meaningful recovery (60%-69.9%) of principal in the event of a payment default.

The agency expects the company to initially use the proceeds to repay revolving credit facility borrowings and to ultimately fund share repurchases.

Sirius XM’s corporate credit rating incorporates S&P’s expectation that the company's leverage will not increase above the 4 times threshold for the rating because of its good operating outlook and growing operating cash flow, and despite its moves to boost shareholder returns.

The agency assesses Sirius XM's business risk profile as "fair," reflecting its stable subscriber churn, dependence on U.S. new auto sales and consumer discretionary spending for growth, and its long-term vulnerability to competition from alternative media.

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