SIRIUS XM Radio Inc. (NASDAQ: SIRI) might not exactly seem like the most stable or improving company by any financial statement analysis on the surface.  If that is really the case, then why has Standard & Poor’s just come out and upgraded the debt ratings of the company?  That is what has happened.  Straight from the “you would not have guessed it” department.

The ratings agency said the upgrade was to reflect its comfort over near-term liquidity needs after refinancing the 2009 debt maturities out to 2011 after Liberty Media (LCAPA) came to the rescue.  S&P said it also believes that additional cost savings can be realized, although noted that the $300 million EBITDA goal may be difficult to reach in 2009.

S&P raised the corporate credit ratings to ‘CCC+’ from ‘CCC.’  S&P also lifted its issue-level ratings by a notch.  This might not sound like an eager endorsement since it is still so deep in junk bond territory.

The one issue which was not raised was the senior unsecured notes that were affirmed at ‘CCC-‘ in this call.  The good news is that the company’s outlook is stable.

The Sirius XM 9.625% and 3.25% senior unsecured notes were raised to ‘6’ from ‘5’ in an indication of negligible (0%-10%) recovery for noteholders in the event of a payment default.

The $172 million 14% senior secured PIK, or pay in kind, notes due in 2011 were assigned as ‘CCC’ with a recover rating of ‘5’ as an indication of a 10% to 30% recovery for noteholders in the event of default.

SIRIUS XM closed down almost 3% at $0.35 today, and shares are up about 2% at almost $0.36 in the after-hours session.  This is not any endorsement for any great waves of upgrades, but it is a start and the criteria for good news is far different than it used to be a few weeks ago.

JON C. OGG

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