Most U.S. muni tobacco bonds will default - Moody's

(Reuters) The majority of tobacco bonds sold by U.S. states, counties and cities will default if cigarette consumption keeps falling at a 3 percent to 4 percent annual pace, Moody's Investors Service said on Thursday. Municipal tobacco bonds are backed by the more than $200 billion in payments cigarette-makers agreed to make over time to states to help pay for the costs of treating ailing smokers.
Under the scenario of declining smoking that Moody's projected, "Bonds constituting 74 percent of the aggregate outstanding balance of all the tobacco settlement bonds will default," the Wall Street credit agency said in a statement. Continued