Sirius XM Radio Inc. Senior Unsecured Note Recovery Rating Revised To '4' From '3', 'BB' Issue-Level Rating Affirmed

NEW YORK (S&P Global Ratings) April 12, 2022--S&P Global Ratings today revised its recovery rating on Sirius XM Radio Inc.'s senior unsecured notes to '4' from '3' and affirmed its 'BB' issue-level rating. This revision follows the company's issuance of a new $500 million senior secured term loan (not rated), which reduced the collateral value available for its existing unsecured noteholders in a default scenario. The '4' recovery rating indicates our expectation for average (30%-50%; rounded estimate: 45%) recovery of principal in the event of a payment default. We expect Sirius XM will use the proceeds from the new term loan to repay a portion of the outstanding borrowings under its $1.75 billion revolving credit facility, which it borrowed from

...Therefore, Pandora Media LLC's convertible senior unsecured notes are structurally subordinated to Sirius XM Radio Inc.'s senior unsecured notes. However, Sirius XM Holdings Inc. guarantees the performance and financial obligations of Pandora Media LLC's convertible senior unsecured notes. Simulated default assumptions - Our simulated default scenario contemplates a default occurring in 2027 due to a combination of the following factors: sharply lower auto sales or the nonrenewal of its distribution agreements with automakers; elevated subscriber churn; increased competition from free or alternative media distribution channels; and the nonrenewal of key programming contracts upon expiration. - Other default assumptions include an 85% draw on the revolving credit facility, LIBOR is 2.5%, the spread on the revolving credit facility and term loan rises to 5% as covenant amendments are obtained, and all debt amounts include six months of prepetition interest. - We value Sirius XM on a going-concern...

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