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S&P upgrades Reynolds
S&P said it raised all of the ratings on Reynolds American Inc. (RAI) and its subsidiary, RJ Reynolds Tobacco Holdings Inc., including the corporate credit and senior unsecured debt ratings, to BBB+ from BBB.
The outlook is stable.
S&P said it expects RAI will become a wholly owned subsidiary of British American Tobacco plc during the third quarter of 2017 after the company completes its purchase of RAI stock that it does not already own, which originally estimated at $49 billion.
The upgrades reflect a belief that British American will provide extraordinary support to RAI in almost any foreseeable circumstance, S&P explained.
This is supported by British American's recent statement that it will treat legacy RAI debt pari passu with British American Tobacco debt, the agency noted.
The stable outlook reflects an expectation that British American Tobacco will complete the Reynolds transaction on the terms provided, S&P said.
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