MoneyGram International

Our stable outlook over the next 12 months reflects our expectation of weak operating performance, the company improving its compliance standards, the successful amendment and extension of its term loan due 2020, and its financial covenants. Our outlook also considers no further penalties related to the amended DPA or any new material compliance deficiency findings. We could lower the ratings over the next 12 months if the company is unable to amend and extend its term loan, operating performance continues to deteriorate, or if new compliance deficiencies arise. We could also lower the rating if the firm's liquidity position worsens. An upgrade is unlikely over the next 12 months given the firm's weak operating performance and the extension of the

...MoneyGram International Inc.'s (MGI) market position faces pricing pressure.MGI, along with Western Union and Ria (a business operated by Euronet International), are leaders in the fragmented global cross-border payment market. We also expect that the rise in financial technology (fintech) firms, such as PayPal and Zelle, will continue to pose a challenge to its domestic transaction volume. Deferred prosecution agreement and a compliance monitor underscore regulatory scrutiny and the need for robust compliance programs. In November 2018, the firm entered into an amendment to its DPA with the DOJ and agreed to pay $125 million, of which $70 million was paid in 2018. Despite the settlement, we negatively view the larger fine and company having to retain a compliance monitor over an extended period because it will further pressure profit margins and increase the prospect of additional negative findings. MGI's leverage has increased above 6.5x in 2018, and we expect it to remain above 6.5x...

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