HG bonds: Western Union targets existing debt with 2-part offering; terms

Western Union Co. today completed a $900 million, two-part offering across 2026 and 2031 notes.

Both tranches were printed in line with at-the-number guidance and through initial whispers in the T+100 and T+145 areas, respectively.

Proceeds will be used, together with cash on hand, to finance the redemption of the company's $500 million of 3.60% notes due March 2022 and to partially repay amounts outstanding under the company's $950 million unsecured delayed-draw term loan facility. Any remaining proceeds will be used for general corporate purposes, according to regulatory filings.

The Denver-based money movement and payment services company last tapped the market in November 2019, when it placed a $500 million offering of 2.85% long five-year senior notes due Jan. 10, 2025, at T+125, or 2.882%. For reference, the issue traded this morning at a G-spread of 78 basis points, according to MarketAxess.

Western Union's BBB/Baa2 corporate credit ratings reflect stable outlooks on both sides. Today's offering is subject to interest rate adjustments providing for coupon step-ups of 25 bps per each notch downgrade below investment-grade, up to 200 bps. The provision falls away on upgrades to A-/A3.

Of note, in 2017, the company reached a $586 million settlement with the U.S. Department of Justice and other regulators related to compliance issues associated with its anti-fraud and anti-money laundering controls. Western Union in 2005 made related settlements with several states.

In a ratings rationale published in December 2020, S&P Global Ratings said: "The stable outlook on The Western Union Co. reflects S&P Global Ratings' expectations that the company will not face any further meaningful compliance matters, will maintain its position as a leading provider of money transfer services worldwide, will sustain debt to adjusted EBITDA between 2.0x and 3.0x, and will preserve a significant cash balance over the next two years. We also expect the company to continue its capital return strategy with operating cash flows."

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