S&P rates Reynolds American notes BBB-

Standard & Poor's said it assigned a BBB- senior unsecured debt rating to Reynolds American Inc.'s proposed senior unsecured notes.

The agency said it expects the company to issue a mix of 10-year and 30-year notes.

The agency also said it expects the company to issue the proposed notes under its Rule 415 shelf registration filed May 23.

The proceeds will be used to redeem its $200 million 7.3% notes due 2015 and its $775 million 7.625% notes due 2016, S&P said. Any balance will be used to repay or prepay some or all of its $300 million term loan balance, the agency said.

All of our existing ratings on Reynolds, including its BBB- corporate credit rating, remain unchanged.

The outlook is stable.

The ratings reflect the company's satisfactory business risk profile and intermediate financial risk profile, S&P said.

The ratings also consider its solid market position as the second-largest cigarette manufacturer in the United States, good profitability and predictable free cash flow generation, the agency said.

They also recognize the potential for adverse litigation outcomes, competitive pricing environment, contracting U.S. cigarette industry and an expectation for further increases in state and federal excise taxes over time, S&P added.

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