S&P rates Vector notes B+

Standard & Poor's said it assigned a B+ secured debt rating to Vector Group Ltd.'s proposed senior notes due 2021 with a recovery rating of 2, indicating 70% to 90% expected default recovery.

The B corporate credit rating on Vector remains unchanged.

The outlook is stable.

The proceeds, in addition to some cash on hand, will be used to repay the company's existing $415 million of senior debt due 2015.

Total debt-to-EBITDA is expected to be in the low-5x range and funds from operations-to-total debt between 8% and 9% by the end of 2013, S&P said.

The ratings reflect the company's highly leveraged financial risk profile as a result of its relatively high debt and its aggressive financial policy, the agency said.

The company's business risk profile is considered weak, reflecting its participation in the intensely competitive discount segment within the declining cigarette industry, significant litigation risk inherent to U.S. tobacco manufacturers and lack of geographic diversification, S&P said.

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