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British American Tobacco (BATSLN; Baa2 Pos, BBB+ S, BBB+ S) upgraded by Fitch

CONSUMER STAPLES
  • Fitch has given a one-notch upgrade for BAT to BBB+ playing catch up to S&P.
  • No surprise, focus for us has been S&P (at BBB+) - we don't see an upgrade from it on new leverage targets (into A-/on-par with PM). It only recently stabilised BAT's outlook from Neg & S&P adj. leverage is unlikely to come in to upgrade territory.
  • Short-end/belly € already trades tight to PM, $ gives more spread pick-up vs. PM across the curve

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