Western Union 2011 Annual Report Download - page 75

interest rate of 5.253%. In connection with the exchange, note holders were given a 7% premium ($21.2 million),
which approximated market value at the exchange date, as additional principal. As this transaction was accounted
for as a debt modification, this premium was not charged to expense. Rather, the premium, along with the
offsetting hedge accounting adjustments, will be accreted into “Interest expense” over the life of the notes. We
may redeem the 2020 Notes at any time prior to maturity at the greater of par or a price based on the applicable
treasury rate plus 15 basis points.
On February 26, 2009, we issued $500.0 million of aggregate principal amount of unsecured notes due
February 26, 2014 (“2014 Notes”). Interest with respect to the 2014 Notes is payable semi-annually on
February 26 and August 26 each year based on the fixed per annum interest rate of 6.500%. We may redeem the
2014 Notes at any time prior to maturity at the greater of par or a price based on the applicable treasury rate plus
50 basis points.
On November 17, 2006, we issued $500.0 million of aggregate principal amount of unsecured notes due
November 17, 2036 (“2036 Notes”). Interest with respect to the 2036 Notes is payable semi-annually on May 17
and November 17 each year based on the fixed per annum interest rate of 6.200%. We may redeem the 2036
Notes at any time prior to maturity at the greater of par or a price based on the applicable treasury rate plus
25 basis points.
On September 29, 2006, we issued $1.0 billion of aggregate principal amount of unsecured notes maturing on
October 1, 2016 (“2016 Notes”). Interest on the 2016 Notes is payable semi-annually on April 1 and October 1
each year based on the fixed per annum interest rate of 5.930%. We may redeem the 2016 Notes at any time prior
to maturity at the greater of par or a price based on the applicable treasury rate plus 20 basis points.
Credit Ratings and Debt Covenants
The credit ratings on our debt are an important consideration in our overall business, managing our financing
costs and facilitating access to additional capital on favorable terms. Factors that we believe are important in
assessing our credit ratings include earnings, cash flow generation, leverage, available liquidity and the overall
business.
Our Revolving Credit Facility contains an interest rate margin and facility fee which are determined based on
certain of our credit ratings. In addition, we are subject to certain provisions in our 2013 Notes, 2014 Notes, 2018
Notes and 2040 Notes and certain of our derivative contracts which could require settlement or collateral posting
in the event of a change in control combined with a downgrade below investment grade. We do not have any
other terms within our debt agreements or other contracts that are tied to changes in our credit ratings. The table
below summarizes our credit ratings as of December 31, 2011:
S&P Moody’s Fitch
Short-term rating ................................................. A-2 P-2 F2
Senior unsecured ................................................. A– A3 A–
Ratings outlook .................................................. Stable Negative Stable
These ratings are not a recommendation to buy, sell or hold any of our securities. Our credit ratings may be
subject to revision or withdrawal at any time by the assigning rating organization, and each rating should be
evaluated independently of any other rating. We cannot ensure that a rating will remain in effect for any given
period of time or that a rating will not be lowered or withdrawn entirely by a rating agency if, in its judgment,
circumstances so warrant. A downgrade or a negative outlook provided by the rating agencies could result in the
following:
• Our access to the commercial paper market may be limited, and if we were downgraded below investment
grade, our access to the commercial paper market would likely be eliminated;
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