Moody's Investors Services
Global Credit Research
Rating Action
31 DEC 2002


Rating Action: XM Satellite Radio Holdings Inc.


MOODY'S PLACES XM RATINGS UNDER REVIEW FOR POSSIBLE DOWNGRADE

Approximately $450 million of Debt Securities Affected

New York, December 31, 2002 -- Moody's Investors Service placed XM Satellite Radio Holdings Inc's (XM) ratings under review for possible downgrade including:

(i) the Caa1 rating on its $325 million of 14% senior secured discount notes due 2010,

(ii) the Caa3 rating on its $79 million of convertible subordinated notes due 2006,

(iii) the Ca rating on its $43 million of 8.25% of convertible redeemable preferred stock due 2012, and

(iv) the company's Caa1 senior implied rating, and

(v) XM's Caa2 senior unsecured Issuer rating.

The review for possible downgrade is prompted by the recently announced plan to recapitalize the company. Moody's is concerned that the plan, which includes additional indebtedness at the senior secured level, will further strain the company's balance sheet and further subordinate existing subordinated noteholders and preferred stockholders. Moreover, XM's liquidity position has been weak. Without the closing of this or some other liquidity event, it is unlikely that the company will be able to operate beyond the first quarter of 2003.

Moody's review will focus on the uncertainty regarding the ability of the company to support the proposed capital structure. In addition, the review will consider the adequacy of the new financing relative to the company's expected need through the rating horizon and the likelihood of additional financial support from XM's strategic partners. However, as a consequence of the high level of uncertainty regarding both the company and the sector in which it operates, the severity of the possible downgrade is unclear.

XM Satellite Radio, Inc. is a development stage company founded to commercialize satellite-to-car audio services in the US. It is headquartered in Washington, D.C.

New York
Russell Solomon
Senior Vice President
Corporate Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

New York
Christina Padgett
VP - Senior Credit Officer
Corporate Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653



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