New York, August 17 (FinanceEnquiry.com) – Analysts at Moody’s Investors Service has assigned a Baa2 senior unsecured rating to Lorillard Tobacco Company and also assigns Baa2 rating to company’s senior unsecured shelf registration. The outlook on the ratings has been stable.
In a research note published yesterday, the analysts state that Lorrilard’s Baa2 rating balance the solid, predictable and highly profitable cash flows and considerable franchise value against the still unpredictable US litigation environment and the limited geographic and product diversification of the company.
The Baa2 rating includes Lorrilard’s 3rd position in the US cigarette industry and its dominant position in the menthol category along with leading market share and significant brand equity for its Newport cigarette brand.
The ratings indicates Lorrilard’s participation in highly competitive segment of the consumer products and the potential for the menthol category’s growth to slow or possible decline consistent with the long term secular decline in the broader cigarette market.
However, the stable outlook indicates the expectation that the company would maintain very solid financial and liquidity metrics in order to balance the uncertain qualitative aspects of its business profile, which have been more consistent with a speculative grade issuer, like product and geographic diversification and current litigation and regulatory risk, the analysts say.
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