Japan Tobacco Inc., the world's third-largest publicly traded cigarette maker, raised 150 billion yen Wednesday selling bonds to repay debt from its purchase of Gallaher Group PLC.
The Tokyo-based company sold bonds in three maturities, tapping demand for highly rated debt even as the risk of owning its securities rose. Credit assessors cut Japan Tobacco's debt ratings in March, citing concerns that the company's finances would deteriorate after it agreed to buy Gallaher, the maker of Benson & Hedges cigarettes in Europe, for £7.5 billion ($15.4 billion).
"Still, Japan Tobacco is a highly rated company and we see its potential of generating cash in the future," said Fumihito Gotoh, a credit analyst at UBS Securities Japan Ltd.
Japan Tobacco's debt is rated Aa3, the fourth-highest investment grade, by Moody's Investors Service, and one step lower at A+ by Standard & Poor's.
The maker of Camel cigarettes sold 50 billion yen in bonds maturing in three years to yield 16 basis points more than Japanese government debt with similar maturity, said a banker at Nomura Holdings Inc.
For related stories:
JT completes Gallaher takeover
JT to buy rival Gallaher for 2.25 trillion yen