Moody's revises outlook on DirecTV ratings to stable

NEW YORK—Moody's Investors Service on Wednesday assigned ratings to DirecTV Group Inc.'s new term loan and bonds, and revised the outlook on the ratings to stable from negative.

Moody's assigned an investment-grade rating of "Baa3" to the satellite television company's proposed $1 billion senior secured term loan maturing in 2013. Moody's gave a junk-grade rating of "Ba3" to DirecTV's $1.35 billion senior unsecured notes maturing in 2016. Moody's also assigned the company an SGL-1 speculative grade liquidity rating to reflect DirecTV's strong free cash flow and large cash balances.

Additionally, Moody's affirmed the company's corporate family credit rating at "Ba2," two notches below investment grade.

Proceeds from the debt offerings will be used for general corporate purposes and to fund share repurchases. Despite a moderate increase in leverage, Moody's said, DirecTV's financial flexibility makes it unlikely that ratings will face downward pressure over the next 12 to 18 months, which warrants the stable outlook.

Moody's had previously maintained a negative outlook because of its expectation that Liberty Media Corp.'s stake in the company would exceed 50 percent. Earlier Wednesday, DirecTV said Liberty Media had agreed to cap its voting interest at 48 percent in exchange for DirecTV's decision to increase its share repurchase program to $3 billion.

DirecTV also said Wednesday that its first-quarter profit rose 10 percent on increased subscribers in the U.S. and Latin America.

DirecTV shares rose 93 cents, or 3.6 percent, to $26.73 in morning trading. Shares have traded between $18.20 and $27.73 in the past 12 months.