www.moodys.com/credit-ratings/...d-AG-credit-rating-822307441
("Moody's") has completed a periodic review of the ratings of Wirecard AG and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since 1 January 2019, Moody's practice has been to issue a press release following each periodic review to announce its completion.
This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page on www.moodys.com for the most updated credit rating action information and rating history.
Key rating considerations are summarized below.
Wirecard's Baa3 issuer rating has been placed on review for downgrade on 2 June 2020 based on the ongoing uncertainties around the allegations regarding fraudulent accounting practices and concentration risks on third party acquirers with repeatedly postponed publication of the audited financial statements for 2019 as well as the company's exposure to the travel & mobility industry which is in significant decline following the outbreak of the coronavirus.
The rating is supported by Wirecard's 1) leading market share in Asia pacific and strong market share in Europe; 2) high and stable Moody's-adjusted EBITA margin of 27%; 3) strong cash generation because of its asset-light business model and moderate shareholder distributions; 4) well-diversified customer base; 5) strong underlying global market growth.
The rating is constrained by Wirecard's 1) Lack of governance and risk control and concentration on opaque business partners; 2) risks of contracting transaction volumes amid the coronavirus outbreak and concurring expected economic recession; 3) fragmented market, with low switching costs for merchants; 4) highly competitive market environment with a trend towards commoditization of payment processing; 5) inherent threat of changes in regulation or technology
This document summarizes Moody's view as of the publication date and will not be updated until the next periodic review announcement, which will incorporate material changes in credit circumstances (if any) during the intervening period.
The principal methodology used for this review was Business and Consumer Service Industry published in October 2016. Please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.
This announcement applies only to EU rated and EU endorsed ratings. Non EU rated and non EU endorsed ratings may be referenced above to the extent necessary, if they are part of the same analytical unit.
This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page on www.moodys.com for the most updated credit rating action information and rating history.
Dirk Goedde
Asst Vice President - Analyst
Corporate Finance Group
Moody's Deutschland GmbH
An der Welle 5
Frankfurt am Main 60322
Germany
JOURNALISTS: 44 20 7772 5456
Client Service: 44 20 7772 5454
Christian Hendker, CFA
Associate Managing Director
Corporate Finance Group
JOURNALISTS: 44 20 7772 5456
Client Service: 44 20 7772 5454
Releasing Office:
Moody's Deutschland GmbH
An der Welle 5
Frankfurt am Main 60322
Germany
JOURNALISTS: 44 20 7772 5456
Client Service: 44 20 7772 5454
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