S&P rates R.J. Reynolds notes BB+

Standard & Poor's said it assigned its BB+ rating to R.J. Reynolds Tobacco Holdings Inc.'s (RJR) $500 million senior secured notes in two tranches due 2010 and 2015.

At the same time, the agency said it affirmed its ratings on the company, including its BB+ corporate credit rating.

The outlook is negative.

The ratings on RJR and related entities are based on the company's participation in the contracting domestic tobacco market, its declining brand volume and market share and uncertainties about the company's future domestic operating performance and pricing strategies, S&P said.

Furthermore, the U.S. tobacco industry continues to face significant litigation to resolve the issue of health care cost recovery, the agency added.

These factors are somewhat mitigated by parent its strong financial condition and moderate financial policies, S&P said.

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