Moody's confirms MoneyGram

Moody's Investors Service said it confirmed MoneyGram International Inc.'s B1 corporate family rating with a negative outlook.

This concludes the review for further possible downgrade begun on Oct. 18, which was prompted by the company's announcement that it had experienced losses to its investment portfolio as a result of the illiquidity in the market for subprime asset-backed securities and collateralized debt obligations.

The agency said it confirmed MoneyGram's B1 rating because the company has removed the uncertainty surrounding the carrying value of its investment portfolio by disposing of the vast majority of its impaired asset-back securities portfolio at a total loss of $1.6 billion. While the sale of the securities resulted in a temporary non-compliance with minimum net worth requirements, the company regained compliance with the recent recapitalization.

The rating continues to be supported by MoneyGram's strong market position in its money transfer business and by the agency's positive outlook for the funds remittance industry, Moody's said.

The negative outlook reflects the uncertainty regarding the profitability of the payment systems segment after the restructuring of the investment portfolio, uncertainties regarding the strategic vision of the new majority owners, legal and regulatory overhang and the outcome of the informal inquiry being conducted by the Securities and Exchange Commission, the agency added.

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