Fitch Views Altria Spin-Off of Kraft as Favorable to Ratings of Both Companies.

CHICAGO -- Fitch will not take any immediate rating actions stemming from the Jan. 31, 2007 vote by the Board of Directors of Altria Group, Inc. (NYSE: MO) (Altria) to authorize the spin-off of the 89% of Kraft Foods Inc.(NYSE: KFT) (Kraft) shares owned by Altria. This distribution to Altria shareholders will be made on March 30, 2007. Barring any substantial changes in financial strategy, Fitch views this tax-free spin off favorably for the ratings of both Altria and Kraft. A list of current ratings can be found at the end of this release.

Assuming Altria's and Kraft's capital structures remain as is, Fitch may review the ratings for possible upgrades after meeting with each company in the near term to assess its financial strategy. Kraft will benefit from being a completely independent company with no association to the tobacco companies owned by Altria. Thus, Kraft's ratings will be de-linked from Altria's and will reflect its current credit profile. The current ratings recognize Kraft's leading market share positions in many categories and the strong brand equities of the Kraft and Nabisco franchises. Kraft's credit metrics are slightly stronger than the current rating level would indicate. However, the company has struggled over the past several years with declining margins, weak volumes and an overall lack of predictable growth. Therefore, it is likely to take more time to see sustainable positive impact from the company's ongoing restructuring efforts.

Credit ratings for Altria are at a lower level than the credit measures indicate due to the ongoing, albeit reduced, tobacco litigation risk. Altria's credit metrics will strengthen further upon the spin-off of Kraft and margins will be significantly higher. Fitch's assessment of the domestic tobacco industry centers on class action cases with the greatest near-to-intermediate term risk. Beyond the legal issues, there are several continuing negative pressures on the tobacco industry including extensive smoking bans which diminish demand and rising excise taxes that can reduce pricing flexibility. Despite these industry factors, the tobacco businesses generate substantial discretionary free cash flow. In addition, Philip Morris International has shown improved trends in Western Europe and Philip Morris USA has continued to raise its total retail share.

Current ratings are as follows:

Altria Group, Inc. (Altria)

--Issuer Default Rating (IDR) 'BBB+';

--Senior unsecured debt 'BBB+';

--Credit facility 'BBB+';

--Commercial paper 'F2'.

Kraft Foods Inc. (Kraft)

--Issuer Default Rating (IDR) 'A-';

--Senior unsecured debt 'A-';

--Credit facility 'A-';

--Commercial Paper 'F2'.

Philip Morris Capital Corp. (PMCC)

--Issuer Default Rating (IDR) 'BBB+';

--Senior unsecured debt 'BBB+';

--Commercial paper affirmed at 'F2'.

Altria Finance (Cayman Islands) Ltd.

--Commercial paper 'F2'.

The Rating Outlooks for Altria and its consolidated subsidiaries are Stable.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.