Sirius XM Radio Inc.'s Proposed $1 Billion Senior Unsecured Notes Due 2029 Rated 'BB' (Recovery Rating: '3')

NEW YORK (S&P Global Ratings) June 5, 2019--S&P Global Ratings today assigned its 'BB' issue-level rating and '3' recovery rating to New York-based satellite radio operator Sirius XM Radio Inc.'s proposed $1 billion senior unsecured notes due 2029. The '3' recovery rating indicates our expectation for meaningful (50%-70%; rounded estimate: 50%) recovery for lenders in the event of a payment default. We revised our rounded recovery estimate for the company's senior unsecured debt to 50% from 55% because of the greater amount of senior unsecured debt outstanding in its capital structure. Sirius XM plans to use the proceeds from the proposed notes to repay a portion of the borrowings under its $1.75 billion revolving credit facility (around $1 billion outstanding

...Radio Inc. does not guarantee Pandora Media LLC's convertible senior unsecured notes. 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 2024 due to a combination of the following factors: sharply lower auto sales or the nonrenewal of 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 rises to 5% as covenant amendments are obtained, and all debt includes six months...

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