RPT-IPO VIEW-Visa IPO hit by unexpected snag-recession fears

(Repeating item that initially moved on Friday)

By Lilla Zuill

NEW YORK, Jan 27 (Reuters) - Visa Inc, the world's largest credit-card network, has been steadily moving toward a public sale of shares, with investors hopeful that the IPO would emulate smaller rival MasterCard's (MA.N) blockbuster stock market debut in 2006.

Now the offering may have hit a snag -- falling stock markets have plunged the U.S. IPO market into an ice bath, chilling the prospects of many offerings that were planned for early 2008.

Credit card companies could be particularly vulnerable because of the downturn in consumer spending that could accompany a recession, something economists view as increasingly likely.

Signs of the downturn have already hit credit-card companies like American Express Co (AXP.N), which surprised Wall Street earlier this month by warning that it was facing mounting consumer loan losses even among its relatively upscale customers. Rival Capital One Financial Corp (COF.N) has struggled lately as well.

Capital One on Wednesday posted a 42 percent decline in earnings.

Visa in November filed to sell shares to the public and has since been restructuring its business to prepare it for the IPO. Analysts had generally expected the company to float its shares during the first half of 2008.

But analysts said with the stock market taking it on the chin, shareholders will most likely decide it is better to stall the offering -- which could raise as much as $10 billion -- until things are more stable.

"The fact that the market is so volatile right now could dampen appetite," said David Robertson, publisher of the Nilson Report, a semimonthly credit card industry trade journal. "There was a time when it would have been good to get it out before the end of the first quarter, but now with the downturn it may be a question of 'why rush?'"

Visa spokesman Paul Cohen declined to comment on the offering's timing, saying he is limited in what he can say during the pre-IPO registration period.

More clues as to how the slowing economy is affecting credit card companies may materialize this week when American Express and MasterCard report quarterly results, and may shed some light on their expectations for the coming year.

American Express is forecast to post a decline of about 5 percent in earnings per share to 71 cents, while MasterCard's earnings per share are seen more than doubling to 72 cents.

Investors have retreated from equities in general as the benchmark Dow Jones Industrial Average .DJI has fallen nearly 7 percent so far this year. Financial stocks, as measured by the Dow Jones U.S. Financials index, have lost 5 percent in the same period.

CAREFUL STEPS

In October, Visa rejigged its structure to separate itself from its European operation, which chose to stay a members-based organization. Within weeks it had filed with the U.S. Securities and Exchange Commission to sell its shares to the public.