Moody's rates EchoStar notes Ba3

Moody's Investors Service said it assigned a Ba3 rating to the recent $1 billion issuance of 6 5/8% senior unsecured notes due 2014 by EchoStar DBS Corp., a wholly owned indirect subsidiary of EchoStar Communications Corp.

Moody's also withdrew the former Ba3 rating for EchoStar DBS' existing $1 billion 10 3/8% senior unsecured notes due 2007, which were scheduled to be called Friday. Finally, Moody's revised the outlook to stable from positive and affirmed all other existing ratings at current levels.

Ratings affirmed include EchoStar Communications Corp.'s $1 billion 5¾% convertible subordinated notes due 2008 at B2, senior implied rating at Ba3, issuer rating at B1, and liquidity rating at SGL-1.

Also affirmed were EchoStar DBS Corp.'s $446 million (remaining amount) of 9 1/8% senior unsecured notes due 2009, $500 million senior unsecured floating-rate notes due 2008, $1 billion 5¾% senior unsecured notes due 2008, and $1 billion 6 3/8% senior unsecured notes due 2011, all at Ba3.

Moody's said the ratings continue to reflect the company's moderately high financial leverage and modest coverage levels; a very competitive operating environment, and related expectations of higher costs to both grow and retain subscribers; and concerns about diminishing returns on invested capital and the long-term strategic position of the company, including the viability of the current business model on a stand-alone basis.

The ratings garner support, however, from the company's very good liquidity position; the large and still rapidly growing size of its subscriber base, which continues to exhibit relatively moderate churn and has recently evidenced better ARPU growth (albeit mostly rate driven); positive free cash flow generation; and historically steady balance sheet improvements - at least until fairly recently - particularly on a comparative basis relative to the industry peer group.

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