MOODYS.COM 9 APRIL 2018 NEWS & ANALYSIS Corporates 2 » Walmart’s new global money transfer service is credit negative for Western Union and MoneyGram » Casino’s partnership with Auchan will reduce purchasing costs, a credit positive » BUMA’s new mining service contract increases scale and is credit positive Infrastructure 7 » For Georgia Power, state regulators’ approval of tax reform settlement is credit positive » NextEra Energy Partners’ sale of Canadian renewable assets is credit positive Banks 9 » Federal Farm Credit Banks would be negatively affected by China’s proposed tariffs » Mexico’s proposed norms for payroll-linked loans are credit positive for banks » Promsvyazbank will benefit from Russian central bank’s capital injections » Oman’s regulatory changes to improve its business environment will moderately weaken banks’ credit profiles » Bank Sohar’s rights issuance will be credit positive » India’s creation of an investment-fluctuation reserve will benefit banks » For Singapore’s banks, a decline in slow payments by corporations is credit positive Insurers 21 » Humana and UnitedHealth team up in blockchain pilot to tackle $2.1 billion annual healthcare data problem Asset Managers or Money Market Funds 22 » Rules to reshape UK asset management are credit negative for active managers Sovereigns 24 » Ethiopia swears in its first Oromian prime minister, a credit positive » Mongolia’s delays and reversals on some structural reforms, if prolonged, are credit negative » Sri Lanka’s new Inland Revenue Act supports government revenue generation, a credit positive RECENTLY IN CREDIT OUTLOOK » Articles in Last Thursday’s Credit Outlook 29 » Go to Last Thursday’s Credit Outlook Click here for Weekly Market Outlook, our sister publication containing Moody’s Analytics’ review of market activity, financial predictions, and the dates of upcoming economic releases. NEWS & ANALYSIS Credit implications of current events 2 MOODY’S CREDIT OUTLOOK 9 APRIL 2018 Corporates Walmart’s new global money transfer service is credit negative for Western Union and MoneyGram Last Tuesday, Walmart Inc. (Aa2 stable) and MoneyGram International, Inc. (B1 stable) announced the launch of Walmart2World, a new money transfer service. MoneyGram will operate the service, which will allow customers to send money from any of Walmart’s 4,700 US stores to any MoneyGram location in 200 countries. The companies also renewed for two more years their long-term contract to offer all MoneyGram products and services at Walmart. The new Walmart2World partnership, which will charge significantly lower fees than competing services, is credit negative for The Western Union Company (Baa2 stable), the industry leader, and MoneyGram, the No. 2 player. The partnership has the potential to capture transaction volume from Western Union for US outbound transfers, cannibalize MoneyGram’s own higher-margin money transfer service and trigger a pricing battle that could weaken revenue and profit at both companies. Walmart2World will charge $4 to send up to $50, $8 to send $51-$1,000 and $16 to send $1,001-$2,500. These fees are lower than what MoneyGram and Western Union typically charge for similar amounts, depending on the origin and destination of the money transfer. Walmart’s entry into the global money transfer market will exacerbate pricing pressures in the industry in much the same way that its Walmart2Walmart white-label domestic money transfer service triggered price cuts among its rivals following its launch in 2014. Walmart2Walmart hurt MoneyGram far more than Western Union because of the latter’s lack of a contractual relationship with the retail giant and the fact that domestic money transfers contribute less than 10% of Western Union’s total revenue. But Walmart2World is likely to have a greater effect on Western Union than Walmart2Walmart did because US outbound activity is a sizable portion of its total revenue. In 2017, Western Union’s revenue from money transfers originating in the US and Canada (including domestic transactions) accounted for 37% of revenue in its consumer-to-consumer segment (which contributed 79% of total company revenue) and about 90% of the segment’s operating profit. During the same period, MoneyGram’s US outbound transactions constituted 44% of total money transfer transactions, with global-money-transfer revenue comprising 89% of total revenue. Walmart is MoneyGram’s largest agent, accounting for 17% of its total revenue in 2017, down from 27% in 2013 owing to the sizable revenue loss following the launch of Walmart’s domestic offering. Walmart’s entry into the global money transfer market will challenge MoneyGram and Western Union’s fees for the US outbound corridors. The potential effect on MoneyGram is less certain because the company has the potential to realize an increase in transaction volume and profit from the Walmart partnership. But these gains could be more than offset by a shift away from