Moody's downgrades MoneyGram

Moody's Investors Service said it downgraded MoneyGram International, Inc.'s corporate family rating to B3 from B2 and existing senior secured credit facility rating to B3 from B2.

Moody's also said it assigned a B2 rating to the proposed amended first-lien credit facility and a Caa2 rating to the proposed second-lien term loan facility.

The outlook remains negative.

The downgrades follow news of MoneyGram's arrangement of a $245 million second-lien senior secured term facility led by Beach Point Capital Management, which has committed $200 million, the agency said.

The second-lien facility will bear interest at 13% per annum, a portion of which may payable in kind at the company's option, Moody's said.

The proceeds from the new second lien facility will be used to reduce outstanding balances under the company's first-lien term facility, the agency said.

The downgrades reflect an expectation that MoneyGram's operating performance will continue to be pressured by the difficult competitive environment and that meaningfully higher cash interest costs attributable to the new first- and second-lien credit facilities will lead to breakeven or modestly positive free cash flow over the next 12- to 18-months, Moody's said.

The ratings also consider pressures encountered by MoneyGram in recent periods due to revenue declines from the company's continued efforts to strengthen its compliance framework, the agency said.

The ratings are supported by MoneyGram's leading position in the global money transfer industry and the value of its broad global network of locations, Moody's said.

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