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Published on 8/29/2007 in the Prospect News Investment Grade Daily.

Moody's affirms Altria

Moody's Investors Service said it affirmed the Baa1 long-term senior unsecured debt rating and Prime-2 short-term rating of Altria Group, Inc. and its subsidiaries following the announcement that the company intends to pursue the spin-off of its Philip Morris International Inc. subsidiary.

The outlook is stable.

The affirmation reflects Moody's expectation that Altria's remaining businesses, including its U.S. cigarette subsidiary Philip Morris U.S.A., will continue to generate significant profitability and cash flow, the agency said.

"The affirmation of Altria's Baa1 long-term and Prime-2 short-term ratings balance the strong, predictable and highly profitable cash flows of its U.S. franchise against the still unpredictable U.S. litigation environment and limited geographic and product diversification of the remaining Altria businesses after its spin-off of PMI," Moody's vice president Janice Hofferber said in a written statement.

The ratings also incorporate Altria's dominant position in the U.S. tobacco market and significant brand equity, Moody's said.

The ratings also reflect the highly competitive consumer products industry as well as the long-term prospects for the category, the agency said.


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