Moody’s cuts Vector notes, changes view to stable

Moody’s Investors Service said it downgraded to Caa1 from B2 Vector Group Ltd.’s $325 million of 10˝% unsecured notes due 2026 which Vector plans to increase to $555 million.

The incremental $230 million (to be rated subsequently) of newly-issued unsecured notes will be used to refinance the company’s 5.5% $232 million of convertible notes due 2020.

At the same time Moody’s affirmed Vector’s ratings, including its B2 corporate family rating, its B2-PD probability of default rating and the Ba3 rating on its $850 million senior secured notes due 2025.

The outlook was changed to stable from negative.

“The downgrade of the 10˝% notes reflects changes the company has made to its capital structure. This includes the addition of more unsecured debt and the elimination of lower priority debt which had previously provided a loss absorption cushion to the unsecured debt in the event of a default. The downgrade does not, however, reflect any deterioration in the company’s fundamental credit profile. In fact, Moody’s changing its rating outlook to stable reflects that it is more comfortable with Vector’s credit profile at its current rating,” said Moody’s in a press release.

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