ECHO/DISH Credit: Two Trades that Echo Through the Transition

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ECHO/DISH Credit: Two Trades that Echo Through the Transition

UpdateMrecommend as the 2026 maturities are repaid, additional SubscriberCo

collateral, a 2028 secured cash sweep, and softened change-of-control

language to permit an eventual DIRECTV combination at ≤ 2.75x closing

leverage. Charlie Ergen said on the call he has "always said it's inevitable"

that DISH and DirecTV eventually combine, adding EchoStar has "no

preconceived notions" on whether it ends up buyer, seller, or JV partner. A

prospective DBS/DIRECTV combination would carry considerable industrial

logic, in our view, though we have no knowledge of any pending deal.

Importantly, even on a standalone basis, absent any possible merger, we

expect DBS to emerge from Chapter 11 with low leverage and strong

covenant protections in its bond indentures, which supports our trade

recommendations regardless of whether a combination ultimately

materializes.

• Spectrum monetization anchors the parent: The AT&T license sale, 30MHz

of 3.45GHz plus 20MHz of 600MHz, $23bn total consideration, has closed,

with $20.25bn to EchoStar and the remainder deposited into an FCC-

mandated Wireless Creditor Trust for network decommissioning; EchoStar’s

share repaid $3.5bn of the 11¾ ’27 secured notes, cleared the DISH DBS loan

agreement, and repaid the DISH DBS 7¾ ’26 notes. The larger SpaceX

transaction ($17bn total consideration; ~$16.8bn of licenses now classified

held-for-sale) is expected by management to close on or about November

30, 2027. Critically for our trade, at that Spectrum Acquisition Closing, the

10.75% ’29 and 6.75 ’30 plus the 3.875 convertible ’30 ($9.821bn aggregate

as of 6/30) are contractually to be paid off in full, with SpaceX funding

interim debt service (~$2bn) until then (it reimbursed $414mn of interim