OREANDA-NEWS. S&P Global Ratings said today that it assigned its 'A-' issue level rating to Richmond, Va.-based Altria Group Inc.'s proposed senior unsecured notes, which Altria will draw from its shelf registration statement filed Oct. 30, 2014. We expect Altria will use proceeds from the debt offering to satisfy the cash tender offer announced today for its 9.95% senior unsecured notes due 2038 and 10.2% senior unsecured notes due 2039, and for other general corporate purposes, including voluntary contributions to pension plans. Altria's primary operating subsidiary, Philip Morris USA Inc., which accounts for the majority of group profitability, will guarantee the proposed notes. We expect the transaction, which includes a meaningful call premium on the notes to be tendered, will result in a modest 0.1x increase in debt to EBITDA to about 1.8x. However, the transaction will result in lower interest costs.
All of our existing ratings on the company, including our 'A-' corporate credit rating, are unchanged. The outlook is stable.
Our ratings on Altria reflect its solid positions across the U. S. tobacco industry; its very high EBITDA margin of around 50%; and its solid and predictable free cash flow generation of over $5 billion. We expect the company's solid management team will continue to successfully manage the long term regulatory and litigation risks inherent in its business.
For the complete corporate credit rational, please see the research update on Altria Group Inc. published March 30, 2016, on Global Credit Portal.
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