S&P gives Vector notes B-

S&P said it affirmed its B issuer credit rating on Vector Group Ltd. The outlook is stable.

At the same time, the agency assigned a B- issue-level rating to the company's proposed $325 million eight-year senior unsecured notes.

The 5 recovery rating on the notes indicates that bondholders could expect modest (10% to 30%, rounded estimate: 15%) recovery in the event of a payment default.

S&P also affirmed the BB- issue-level rating on the company's $850 million senior secured notes due 2025. The 1 recovery rating indicates very high (90% to 100%, rounded estimate: 90%) recovery.

Vector Group plans to issue the new $325 million notes to repay its $230 million unsecured convertible notes maturing in 2019.

“We expect the transaction will lead to moderate credit metric deterioration, including leverage weakening to the high-5x area,” the agency said in a news release.

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