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Bond Market News
BAT Upgraded to A- by Fitch
March 16, 2026
British American Tobacco Plc (BAT) was upgraded by a notch to A- from BBB+ by Fitch. The upgrade reflects BAT’s strong global tobacco franchise, diversified geographic presence, solid profitability, consistent cash flow generation, and a conservative financial policy. Fitch expects the company to generate £1.8–2.4bn ($2.4–3.2bn) in post-dividend free cash flow annually during the 2026–2028 period, supported by modest revenue growth and efficiency improvements. The rating also benefits from BAT’s leadership in next-generation products such as vaping, heated tobacco, and oral nicotine, which saw 7% organic revenue growth and generated £442mn ($586mn) in operating profit in 2025. Fitch also cited BAT’s disciplined net leverage target of 2.0–2.5x from 2026, and projects that leverage will decline to about 2.3x by 2027. Fitch added that improvements in the US combustible business, strong nicotine pouch growth, and robust cash generation are expected to support company’s share buybacks from 2027 without compromising its leverage targets.
BAT’s bonds traded stable. For instance, the 5.35% 2032s were at 102.8, yielding 4.8%.
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