NEW YORK (AP) – Moody's Investors Service placed DirecTV Holdings LLC's credit ratings on review for a possible upgrade Tuesday, saying the company appears committed to maintaining a lower level of debt.
The ratings agency said DirecTV's "Ba2" probability of default rating and "Ba3" rating on senior unsecured notes may get a boost. Both are currently non-investment grade, or "junk."
In a statement, Moody's said DirecTV "may now target and sustain its current lower leverage."
The company is the U.S. arm of DirecTV Group Inc., which is controlled by Englewood, Colo.-based Liberty Media Corp. DirecTV plans to merge with Liberty's entertainment unit and be spun off into a new publicly traded company (story here).
Moody's said the spin-off reduces the "probability of a significantly leveraging event" for the company.
The agency said it will also take into account DirecTV's "ability to maintain and grow its subscriber base, revenues and free cash flow in light of the contracting U.S. economy" and competition from cable TV providers.
Recently, the CEO of Liberty Media said that a sale of DirecTV to a phone company is possible after its planned spin-off (story here). In an interview with The Associated Press, Greg Maffei said phone companies could have strategic reasons for buying DirecTV, the nation's largest satellite provider.