Fitch Ratings has affirmed PayPal Holdings Inc.'s BBB+ long-term issuer default rating, noting the company's future growth potential given its "strong" leadership role in the digital payments sector and "solid" profitability.
The rating has a stable outlook.
While the company has indicated an interest in moving toward debt as part of its capital structure, Fitch said PayPal will continue to conservatively manage its balance sheet and that its growth cash balance outside the U.S. will likely be augmented by incremental leverage. The rating agency said it expects PayPal to maintain domestic debt as a way of helping to fund share buybacks and acquisitions and building up its offshore cash balances.
Fitch said PayPal will likely benefit from the continued boom online and mobile shopping, which is not expected to slow down any time soon. Still, the company is also operating in a "highly fragmented, competitive industry" that does not seem to be easing up in the upcoming years, according to the rating agency.