S&P assigns Vector notes BB-

S&P said it assigned BB- and 1 recovery ratings to Vector Group Ltd.’s planned $850 million of senior secured notes due 2029. The 1 recovery rating indicates expectations for very high (90%-100%; rounded estimate 95%) recovery in default.

Proceeds will be used to redeem $850 million of 6 1/8% senior secured notes due 2025. The agency plans to withdraw ratings on the 6 1/8% secured notes following their repayment. S&P said it views the transaction as leverage neutral.

S&P also revised Vector’s outlook to positive from stable and affirmed its B issuer rating.

“The positive outlook reflects the potential we will raise our rating on Vector over the next 12 months if it generates solid – albeit slightly lower – adjusted EBITDA because of increased consumer mobility while continuing to demonstrate less-aggressive financial policies such that it sustains adjusted leverage of less than 5x,” the agency said in a press release.

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