(Alliance News) - Moody's Investors Service on Thursday assigned a Ba1 long-term rating to the proposed perpetual junior subordinated notes to be issued by London-based British American Tobacco PLC.
The outlook on the rating is stable. The proceeds from the issuance will be used for general corporate purposes including repayment of debt.
The assigned rating assumes there will be no material variations to the draft legal documentation and the size of the issuance remains subject to market conditions, Moody's noted.
BAT's Baa2 long-term issuer rating and stable outlook are unaffected by the new rating assigned. BAT's rating is supported by its position as the world's largest tobacco company in terms of revenue, Moody's noted, as well as strong market positions in multiple countries and a brand portfolio that includes five of the 10 best-selling cigarette brands globally.
The Ba1 rating assigned to the notes is two notches below BAT's long-term issuer rating, reflecting the deeply subordinated nature of the debt, Moody's explained.
"The Ba1 rating assigned to the hybrid bonds is two notches below BAT's long-term issuer rating of Baa2, primarily because the bonds are deeply subordinated and ranking senior only to common equity in the company's capital structure," said Roberto Pozzi, a Moody's senior vice president.
BAT shares were trading 0.4% higher in London on Friday at 2,673.00 pence each.
By Evelina Grecenko; evelinagrecenko@alliancenews.com
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British American Tobacco (BATS)