In the next chapter of the ongoing tobacco litigation saga, the Department of Justice will seek to reclaim $280 billion in ill-gotten profits from tobacco companies under the Racketeer Influenced and Corrupt Organizations (RICO) Act, a statute originally intended to prosecute the Mafia. The outcome could hurt ABS transactions backed by litigation fees.

None of the litigation-fee backed transactions are currently on credit watch, however, they are vulnerable to an unfavorable ruling, said Moody's Investors Service analyst Myrna Fajardo. "It would depend on which companies were downgraded, and how many notches," Fajardo said.

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