Fitch affirms DirecTV

Fitch Ratings said it affirmed the BBB- issuer default rating assigned to DirecTV Holdings LLC, a wholly owned indirect subsidiary of DirecTV.

The agency assigned a BBB- rating to the company's 3 1/8% senior notes due 2016, 4.6% senior notes due 2021 and 6% senior notes due 2040.

Proceeds from the note issuance, which totaled about $3 billion, are expected to be used for general corporate purposes including the prepayment of the company's term loan A and B under its senior secured credit facility.

Since DirecTV's board of directors established a long-term leverage target of 2.5 times in August 2009, the company has aggressively increased debt levels nearly 81% when compared with debt outstanding as of June 30, 2009, according to the agency.

Including the August issuance, leverage has grown to 2x pro forma as of the 12 months ending June 30, from 1.3x for the 12 months ended June 30, 2009, progressing steadily to the company's long-term leverage target and in line with expectations, Fitch said.

Ratings reflect the size and scale of the company's operations, expectation for continued generation of free cash flow and the company's high level of financial flexibility, the agency said.

Concerns center on the evolving competitive landscape, lack of revenue diversity and narrow product offering, and growing network based telephone company video competition, the agency noted.

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