Fitch Rates Western Union's Commercial Paper Program 'F2'.NEW YORK New York, state, United States
New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of -- Fitch has assigned an 'F2' rating to The Western Union Company's (Western Union) anticipated $1.5 billion 4(2) commercial paper (CP) program.
Fitch continues to rate Western Union as follows:
--Issuer default rating (IDR IDR
In currencies, this is the abbreviation for the Indonesian Rupiah.
The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. ) 'BBB+';
--Senior unsecured debt Unsecured debt
Debt that does not identify specific assets that the debtholder is entitled to in case of default. 'BBB+';
--Senior unsecured credit facility 'BBB+'.
The Rating Outlook is Stable.
The CP rating of 'F2' considers Western Union's solid liquidity consisting of cash and cash equivalents of $1.3 billion, a $1.5 billion unsecured credit facility expiring 2011 that fully backs the CP program, and strong and consistent free cash flow averaging over $800 million annually for the past three years. Western Union plans to utilize the CP program for general corporate purposes as well as potentially refinance a portion of its $2.4 billion bridge loan stemming from the company's recent spin off from First Data Corp. (rated 'A', Stable Outlook by Fitch).
Fitch's long-term ratings continue to be supported by Western Union's extensive domestic and growing international agent network; strong worldwide brand; solid profit margins due to economies of scale, reflecting the company's significant size and market position; consistent free cash flow; and solid liquidity and financial flexibility.
Fitch's rating concerns center on:
--Pressured operating margins due to strong competition in the payment services market from large international banks, as well as smaller, geographically concentrated niche players;
--Slightly pressured free cash flow due to higher capital spending capital spending
Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. requirements that Fitch attributes mostly to increased agent bonuses;
--Uncertainty regarding the long-term impact of immigration immigration, entrance of a person (an alien) into a new country for the purpose of establishing permanent residence. Motives for immigration, like those for migration generally, are often economic, although religious or political factors may be very important. legislation in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. on Western Union;
--Industry risk of incremental expenses or business disruptions associated with the heightened worldwide regulatory environment in which Western Union and its agents operate;
--Acquisition risk and potential for more aggressive shareholder friendly activities.
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