Engle case fails to affect tobacco ratings

Standard & Poor’s has decided not to change its position on tobacco-backed bonds, despite last week’s dismissal of the $145 billion Engle case by the Florida Supreme Court.

Last week’s ruling prompted a positive reaction in the credit markets, with Altria and BAT both experiencing an immediate tightening of CDS spreads. However S&P is not convinced that tobacco manufacturers are in the clear, noting: “The risk of a negative decision in other significant litigation still remains.”

Says S&P credit

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