DBRS lowers DISH convertibles, lifts EchoStar notes

DBRS said it downgraded DISH Network Corp.'s convertible subordinated debt to RR6/B (high), assigned a BB issuer rating to subsidiary EchoStar DBS Corp. and upgraded EchoStar's senior unsecured notes to RR3/BB (high).

The trends are stable. DISH's ratings were previously on a positive trend, but DBRS said it expects the business risk profile to remain competitive for DISH, which better places EchoStar DBS's issuer rating at BB with a stable trend.

With the loss of AT&T Inc. as a resale partner after its current agreement expires at the end of January, gross subscriber additions could be pressured should DISH not be able to replace the benefits from this partnership, DBRS said. As a result, the agency expects churn levels to remain elevated while DISH seeks to tackle piracy and strengthen its distribution channels.

The BB issuer rating is supported by scale benefits, good profitability with EBITDA margins trending above 26% and healthy free cash flow of $1 billion for the latest period and strong credit metrics, the agency said.

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