Cigarette sales reached an historic 55-year low in the U.S., according to a survey by the National Association of Attorneys General (NAAG) that came out earlier this month. Cigarette companies are also complaining about other pressures that threaten their businesses. However, the negative headlines should not be a near-term problem for tobacco securitizations that have continued to come to market this year after a yearlong absence, according to Fitch Ratings.
Last week, Stanislaus and Nassau counties in California announced plans to issue more bonds backed by their shares of future revenues from the 1998 Master Settlement Agreement (MSA) with the four largest tobacco companies in the U.S. The California County Tobacco Securitization Agency is planning to issue a relatively tiny amount, $34 million, while the Nassau County Tobacco Settlement Corp. is planning to push $437.7 million in tobacco-backed bonds onto the market. Fitch Ratings assigned triple-B to double-B ratings to both deals, according to presale reports.