Western Union 2012 Annual Report Download - page 72

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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, the interest rates payable on our 2015 Notes and 2017 Notes can be impacted by our credit ratings, and
we are also subject to certain provisions in many of our notes, including our 2015 Notes and 2017 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, 2012:
S&P Moody's Fitch
Short-term rating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-2 P-2 F2
Senior unsecured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . BBB+ Baa1 BBB+
Ratings outlook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Negative Negative Negative
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;
• the interest rates payable on our 2015 Notes and 2017 Notes would be increased, beginning at a downgrade below investment
grade; however, in no event would the interest rate on either the 2015 Notes or 2017 Notes be increased by more than
2.00% above 2.375% and 2.875% per annum, respectively, and the interest rates on the 2015 Notes and 2017 Notes may
also be adjusted downward for debt rating upgrades subsequent to any debt rating downgrades but may not be adjusted
below 2.375% and 2.875% per annum;
• we may be required to pay a higher interest rate in future financings;
• our potential pool of investors and funding sources may decrease;
• regulators may impose additional capital and other requirements on us, including imposing restrictions on the ability of
our regulated subsidiaries to pay dividends; and
• our business relationships may be adversely impacted.