MoneyGram International

The negative outlook reflects our expectation that challenging operating conditions from COVID-19 will result in declining operating performance, EBITDA interest coverage of 1.5x-2.0x, and debt to EBITDA of over 6.5x. Our outlook also considers the firm's existing market position in global money transfer services and its adequate covenant cushion. We could lower the ratings over the next 12 months if we expect EBITDA coverage to decrease below 1.5x on a sustained basis, if the covenant cushion substantially declines, or if further compliance deficiencies arise. We could revise our outlook to stable over the next 12 months if EBITDA interest coverage improves to well above 2.0x on a sustained basis, if MoneyGram settles its remaining DPA with no further compliance deficiencies,

... faces pricing pressure. MGI, along with Western Union and Ria (a business by Euronet International), are leaders in the fragmented global cross-border payment market. We expect the rise in fintech firms, such as Venmo, PayPal, and Zelle, to continue challenging MoneyGram's domestic transaction volume. The DPA and independent compliance monitor underscore regulatory scrutiny and the need for robust compliance programs. In February 2020, MGI entered into an amendment to extend its DPA with the DOJ. MGI requested to reduce the amount and further extend the final payment deadline under the amended DPA to May 8, 2021. The government has agreed to extend the $55 million payment to Nov. 8, 2020, while it considers whether to extend the final due date and potentially reduce the final payment amount. MGI's leverage has increased to over 7.0x in 2019, and we expect it to remain at 6.5x-7.5x in 2020. This is based on our expectation for the coronavirus...

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