Tobacco Sees Best Gain Since April After 17% Drop: Muni Credit
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The $84 billion market for junk-rated tobacco bonds, one of the weakest areas of municipal debt this year, is rallying to a one-month high after a ruling against cigarette makers in a payment dispute with states.
Obligations from New York and Ohio, which account for about a third of high-yield tobacco debt, are leading the gains. Yields on 29-year New York City bonds backed by payments under a 1998 national settlement with cigarette companies fell to 7.76 percent on Sept. 13, the lowest in a month, data compiled by Bloomberg show. The extra interest rate on Ohio securities maturing in June 2047 dropped to a one-month low on Sept. 13, two days after the arbitrators’ findings.