Wall Street gobbles up XM bonds


XM Satellite Radio, a subsidiary of Sirius XM, had planned to sell $350 million of senior secured notes to refinance existing debt, but the Wall Street response was so strong that the offering was increased to $525.75 million. That gave Sirius XM some financial flexibility.

The new notes due 2013 will pay interest at an annual rate of 11.25%. They priced at 95.093% of par, so the effective yield is 12.875%. Gross proceeds from the sale will be just shy of a half billion bucks ($499,951,448).

As planned, Sirius XM will use the proceeds to repay all of the $350 million credit facility that XM drew in connection with the merger. With the windfall of additional cash (and, presumably, some other cash on hand), it also plans to replace the $150 million second-lien credit agreement with Liberty Media Corporation.