Gallaher, the UK tobacco company, shrugged off investor scepticism in the tobacco sector and speculation that it may bid for a European rival to launch a €750m ($664m) benchmark bond that was twice oversubscribed.

Speculation last week that the UK company was among the interested parties in Reemtsma, the world's fourth largest cigarette firm, had triggered concern that Gallaher's Baa3/BBB credit ratings might slip below investment grade on the back of an acquisition.