S&P downgrades Western Union

Standard & Poor's said it lowered the long-term issuer credit rating on Western Union Co. to BBB from BBB+.

The outlook is stable.

The agency also said it lowered the rating on the company's senior unsecured notes to BBB from BBB+.

The action reflects an expectation that debt-to-adjusted EBITDA will remain in the high-2x range, underpinned by higher compliance costs and recent money transfer price reductions, said Igor Koyfman, an S&P analyst.

"Over the past year, the company responded to an increasingly competitive remittance market by adjusting its pricing, which resulted in transaction growth but led to lower earnings," Koyfman said in a press release.

During 2013, consumer-to-consumer transactions increased 5% from the prior year, but consolidated revenues declined 2%, Koyfman added.

Western Union's extensive compliance program is an advantage over competitors that lack the resources to make similar investments, the analyst said.

Still, the company must meet regulatory requirements in multiple states and foreign jurisdictions, the analyst said.

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