Cigarette consumption in the U.S. is declining, according to industry statistics, which suggests a shortfall in available revenue to secure tobacco ABS deals. As Louisiana and Virginia prepare to issue their own tobacco settlement bonds, however, securitization professionals say there is still plenty of room for growth in the unique asset class.

Only about 19 out of 46 states that participated in the $200 billion Master Settlement Agreement from 1998 have securitized their share of payments, leaving more room for growth in the asset class, said industry observers. In the meantime, a couple of seasoned users of ABS are tapping the securitization market for more of their share of the settlement.

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