S&P Rates Priceline's (PCLN) Proposed Euro-Denominated Senior Debt Offering

Standard & Poor's Ratings Services assigned its 'BBB+' issue-level rating to The Priceline Group's (Nasdaq: PCLN) proposed Euro-denominated senior debt offering due 2024. The company will use the proceeds from the offering for general corporate purposes, including share repurchases, repaying debt, and acquisitions. The issue rating is at the same level as the corporate credit rating on Priceline.

Pro forma for the debt offering, we expect Priceline to maintain a net cash position. Our debt leverage threshold for our 'BBB+' corporate credit rating on Priceline is 1.0x. We assess Priceline's financial risk as "modest" because of its net cash position, moderate financial policy, and strong discretionary cash flow generation. We expect the company to maintain its prudent approach regarding share repurchases, dividends, and acquisitions.

We assess Priceline's business risk profile as "satisfactory," reflecting the company's market-leading position in European hotel reservation services, especially in secondary and tertiary markets, and its growing presence in Asia and North America.

The stable rating outlook reflects our expectation that Priceline will maintain a healthy growth rate as its Booking.com and Agoda brands continue to maintain operating momentum. Although a rating change is unlikely over the next 12-18 months, we could lower the rating if new entrants or existing competitors threaten Priceline's competitive position in Europe or the U.S., leading to revenue and margin deterioration. We could also downgrade the company if it adopts a more aggressive financial policy, either through share repurchases or acquisitions, leading debt leverage to exceed 1x on a more-than-temporary basis.

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