S&P downgrades Altria

S&P said it downgraded Altria Group Inc.'s issuer credit rating to BBB from A-, along with the ratings on its senior unsecured debt to BBB from A-/

The downgrades reflect the significant increase in leverage and a shift away from the company's historically conservative financial policy, S&P said.

Pro forma for the acquisitions, the agency said it estimates leverage to be slightly less than 3x.

Given Altria's track record of high shareholder returns and its recent propensity for growth-oriented investments, S&P said it expects leverage will be sustained in the high-2x range over the next few years.

The downgrades also reflect the evolving regulatory landscape and growing uncertainty as to how actions by the U.S. Food & Drug Administration (FDA) could affect tobacco and non-tobacco products, including e-cigarettes, the agency said.

S&P said it expects JUUL to maintain its clear market-leading position in the United States and likely increase margins.

But, a significant portion of JUUL's sales are driven by fruit- and cream-flavored pods that will now be removed from brick-and-mortar stores and websites that do not have strict age verification practices, the agency said.

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