TEXT-Fitch expects to rate American Express Co notes 'A+'

Tue Nov 13, 2012 1:56pm EST

Nov 13 - Fitch Ratings expects to rate American Express Company's 
(AXP) new senior unsecured notes, maturing in December 2022 and December 2042,
'A+'. The new notes are being offered in association with a debt exchange and
will be combined with cash to redeem a portion of AXP's 8.125% senior notes
maturing in 2019 or 8.150% senior notes maturing in 2038. Principal outstanding
on the 2019 notes is $1.75 billion, and principal outstanding on the 2038 notes
is $1.0 billion. Each exchange offer is subject to a minimum of $500 million
principal amount of new notes to be issued.

Fitch does not consider the transaction to be a coercive debt exchange. Instead,
Fitch believes the issuance is an attempt to improve funding costs in the 
attractive capital markets environment.    

RATING DRIVERS AND SENSITIVITES

The Stable Outlook on AXP reflects the expectation that company will continue to
generate earnings consistency, peer-superior asset quality, and maintain solid 
liquidity and strong risk-adjusted capitalization. 

However, negative rating action could be driven by an inability by AXP to 
maintain its competitive position and earnings prospects in an increasingly 
digitized payment landscape. While the company is focused on strategic 
acquisitions and alliances to expand its online and mobile capabilities, 
competition from technology companies and social networks, with access to 
significant consumer data, is expected to intensify. Still, a meaningful shift 
in consumer payment behavior is expected to take some time to develop.

 

Negative rating momentum could also be driven by a decline in earnings 
performance, resulting from a decrease in market share, declines in merchant 
acceptance, or an inability to contain costs, a weakening liquidity profile, 
and/or significant reductions in capitalization.

Fitch believes positive rating momentum is relatively limited given AXP's 
concentration in payments and consumer products. 

Fitch expects to assign the following rating:

American Express Company

-- Senior Unsecured Debt 'A+'.

Fitch currently rates AXP as follows:

American Express Co.

-- Long-term IDR 'A+';

-- Short-term IDR 'F1';

-- Short-term debt 'F1';

-- Senior debt 'A+';

-- Hybrid capital instrument 'BBB';

-- Viability Rating 'a+';

-- Support '5'; 

-- Support Floor 'NF'.

American Express Credit Corp.

-- Long-term IDR 'A+';

-- Short-term IDR 'F1';

-- Short-term debt 'F1';

-- Senior debt 'A+'.

 

American Express Centurion Bank

-- Long-term IDR 'A+';

-- Short-term IDR 'F1';

-- Senior debt 'A+';

-- Long-term deposits 'AA-'.

-- Short-term deposits 'F1+'; 

-- Viability Rating 'a+';

-- Support '5';

-- Support Floor 'NF'.

American Express Bank, FSB

-- Long-term IDR 'A+';

-- Short-term IDR 'F1';

-- Senior debt 'A+';

-- Long-term deposits 'AA-'.

-- Short-term deposits 'F1+';

-- Viability Rating 'a+';

-- Support '5';

-- Support Floor 'NF'.

American Express Travel
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.