Fitch affirms eBay

Fitch Ratings said it affirmed eBay Inc.'s long-term issuer default rating and senior unsecured debt at A.

The outlook is stable.

The agency said the ratings and outlook are supported by eBay's market-leading payments business, complemented by the strong traffic and user base of the online commerce segment; its conservative financial policies and credit protection measures; and strong financial flexibility and liquidity highlighted by a free cash flow conversion rate in excess of 25% of revenues.

Fitch's concerns center on expected lower operating margins due to a mix-shift, mostly driven by expected higher growth of the lower-margin PayPal business relative to Marketplaces; the company's ability to achieve consistent growth and differentiation of Marketplaces; event risk of acquisitions; and an increase in consumer lending services, including the possibility of debt issuance to support resultant increase in finance receivables that are currently funded via free cash flow.

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