Fitch Affirms Over $14.6B In U.S. Tobacco Settlement ABS

NEW YORK--(BUSINESS WIRE)--Fitch Ratings has affirmed over $14.6 billion in outstanding tobacco settlement bonds. Fitch's rating of the tobacco settlement asset-backed bonds relies on the rating of the U.S. domestic tobacco industry and the payment of bond principal by its stated legal final maturity under Fitch's cash flow stress scenarios. A detailed ratings list follows the end of the release.

Fitch currently rates the U.S. domestic tobacco industry 'BBB-' with a Stable Outlook. Fitch revised the sector's Outlook to Stable from Negative on May, 16, 2006 on improvements in both the litigation and operating environment, in addition to the tobacco companies' improved financial condition.

The tobacco industry rating is primarily driven by the credit profiles of the three largest public tobacco manufacturers, Altria Group, Inc. (Issuer Default Rating of 'BBB+' by Fitch), Reynolds American Inc. (IDR rated 'BB'), and Loews Corporation (IDR rated 'A'), which comprise approximately 89.2% of U.S. domestic market share with Altria Group, Inc. the market leader, comprising approximately 50%.

Tobacco settlement bonds are tied to Fitch's industry rating of the tobacco industry. Due to the executory nature of the Master Settlement Agreement (MSA), the highest rating achievable under Fitch's criteria is 'BBB', one notch higher than the tobacco industry rating of 'BBB-'. In the event of a bankruptcy of a participating manufacturer, Fitch believes there is an incentive for the manufacturer to choose to continue to make payments under the MSA and the tobacco settlement revenues would therefore continue to flow to bondholders. The MSA is an industry-wide settlement of all past and future claims by the settling states against the participating manufacturers for reimbursement of health-related costs due to tobacco consumption.

In evaluating the existing ratings on the tobacco settlement asset-backed transactions, Fitch considered cash flow stress scenarios for each rating level to determine if the tobacco settlement asset-backed bonds paid off in full by their stated legal final maturity dates. Each of the bonds passed Fitch's cash flow stress scenarios. Fitch's cash flow stress scenarios do not consider any Non-Participating Manufacturers Adjustments, (NPM Adjustment) that may cause a state's tobacco settlement revenues to be reduced due to failure to enforce the Model Statute, designed to create an incentive for tobacco manufacturers to participate in the MSA.

Fitch has affirmed the following tobacco settlement asset-backed bonds:

Badger Tobacco Asset Securitization Corporation (Wisconsin), series 2002

--$12,485,000 serial bonds due June 1, 2007 'BBB';

--$31,220,000 serial bonds due June 1, 2008 'BBB';

--$33,565,000 serial bonds due June 1, 2009 'BBB';

--$32,770,000 serial bonds due June 1, 2011 'BBB';

--$34,040,000 serial bonds due June 1, 2012 'BBB';

--$209,260,000 fixed amortization bonds due June 1, 2017 'BBB';

--$562,130,000 turbo term bonds due June 1, 2027 'BBB';

--$100,000,000 turbo term bonds due June 1, 2028 'BBB';

--$414,470,000 turbo term bonds due June 1, 2032 'BBB'.

The California County Tobacco Securitization Agency (Alameda County Tobacco Asset Securitization Corporation), series 2002

--$1,810,000 serial bonds due June 1, 2007 'BBB';

--$2,985,000 serial bonds due June 1, 2008 'BBB';

--$3,020,000 serial bonds due June 1, 2009 'BBB';

--$3,070,000 serial bonds due June 1, 2010 'BBB';

--$3,130,000 serial bonds due June 1, 2011 'BBB';

--$2,905,000 serial bonds due June 1, 2012 'BBB';

--$5,605,000 turbo term bonds due June 1, 2019 'BBB';

--$51,485,000 turbo term bonds due June 1, 2029 'BBB';

--$45,170,000 turbo term bonds due June 1, 2035 'BBB';

--$76,250,000 turbo term bonds due June 1, 2042 'BBB'.

Alameda County Tobacco Asset Securitization Corporation, series 2006

--$38,683,877.20 capital appreciation bonds 2006A due June 1, 2050 'BBB-'

--$12,790,902.40 capital appreciation bonds 2006B due June 1, 2050 'BB'.

The California County Tobacco Securitization Agency (Fresno County Tobacco Funding Corporation), subordinate series 2006

--$16,605,906.60 subordinate series 2006A turbo capital appreciation bonds due June 1, 2046 'BBB'

--$2,889,808.80 subordinate series 2006B turbo capital appreciation bonds due June 1, 2046 'BBB-'

--$9,756,936.00 subordinate series 2006C turbo capital appreciation bonds due June 1, 2055 'BB-'.

The California County Tobacco Securitization Agency (Kern County Tobacco Funding Corporation), series 2002

--$40,960,000 turbo term bonds 2006A due June 1, 2043 'BBB';

--$27,875,000 turbo term bonds 2006B due June 1, 2029 'BBB';

--$29,010,000 turbo term bonds 2006B due June 1, 2037 'BBB';

--$ 4,920,000 turbo term bonds 2006C due June 1, 2015 'BBB'.

California County Tobacco Securitization Agency (Los Angeles County Tobacco Securitization Corporation), series 2006

--$60,279,685 convertible turbo bonds series 2006A due June 1, 2021 'BBB';

--$46,370,435 convertible turbo bonds series 2006A due June 1, 2028 'BBB';

--$62,196,244 convertible turbo bonds series 2006A due June 1, 2036 'BBB';

--$53,157,077 convertible turbo bonds series 2006A due June 1, 2041 'BBB';

--$72,159,811 convertible turbo bonds series 2006A due June 1, 2046 'BBB';

--$13,586,212 turbo capital appreciation bonds series 2006B due June 1, 2046 'BBB-';

--$12,077,640 turbo capital appreciation bonds series 2006C due June 1, 2046 'BB'.

California County Tobacco Securitization Agency (Merced County Tobacco Funding Corporation), series 2005

--$2,200,000 series 2005B turbo term bonds due June 1, 2019 'BBB';

--$6,515,000 series 2005A turbo term bonds due June 1, 2026 'BBB';

--$15,160,000 series 2005A turbo term bonds due June 1, 2038 'BBB';

--$15,815,000 series 2005A turbo term bonds due June 1, 2045 'BBB'.

California County Tobacco Securitization Agency (Stanislaus County Tobacco Funding Corporation), series 2002

--$4,565,000 turbo term bonds due June 1, 2019 'BBB';

--$24,490,000 turbo term bonds due June 1, 2033 'BBB';

--$34,725,000 turbo term bonds due June 1, 2043 'BBB'.

California County Tobacco Securitization Agency (Stanislaus County Tobacco Funding Corporation), series 2006

--$20,965,835 subordinate series 2006A due June 1, 2046 'BBB';

--$2,827,546 subordinate series 2006B due June 1, 2046 'BBB-';

--$9,446,325 subordinate series 2006C due June 1, 2055 'BB'.

California Statewide Financing Authority, series 2002

--$370,000 series 2002A serial bonds due May 01, 2007 'BBB';

--$905,000 series 2002A serial bonds due May 01, 2008 'BBB';

--$860,000 series 2002A serial bonds due May 01, 2009 'BBB';

--$820,000 series 2002A serial bonds due May 01, 2010 'BBB';

--$785,000 series 2002A serial bonds due May 01, 2011 'BBB';

--$1,040,000 series 2002A serial bonds due May 01, 2012 'BBB';

--$1,020,000 series 2002A serial bonds due May 01, 2013 'BBB';

--$955,000 series 2002A serial bonds due May 01, 2014 'BBB';

--$935,000 series 2002A serial bonds due May 01, 2015 'BBB';

--$930,000 series 2002A serial bonds due May 01, 2016 'BBB';

--$930,000 series 2002A serial bonds due May 01, 2017 'BBB';

--$28,045,000 series 2002A turbo term bonds due May 01 2029, 'BBB';

--$27,540,000 series 2002A turbo term bonds due May 01 2037, 'BBB';

--$33,095,000 series 2002A turbo term bonds due May 01, 2043 'BBB';

--$365,000 series 2002B serial bonds due May 01, 2007 'BBB';

--$895,000 series 2002B serial bonds due May 01, 2008 'BBB';

--$850,000 series 2002B serial bonds due May 01, 2009 'BBB';

--$810,000 series 2002B serial bonds due May 01, 2010 'BBB';

--$775,000 series 2002B serial bonds due May 01, 2011 'BBB';

--$1,030,000 series 2002B serial bonds due May 01, 2012 'BBB';

--$1,010,000 series 2002B serial bonds due May 01, 2013 'BBB';

--$945,000 series 2002B serial bonds due May 01, 2014 'BBB';

--$925,000 series 2002B serial bonds due May 01, 2015 'BBB';

--$920,000 series 2002B serial bonds due May 01, 2016 'BBB';

--$920,000 series 2002B serial bonds due May 01, 2017 'BBB';

--$27,765,000 series 2002B turbo term bonds due May 01, 2029 'BBB';

--$27,265,000 series 2002B turbo term bonds due May 01, 2037 'BBB';

--$32,765,000 series 2002B turbo term bonds due May 01, 2043 'BBB'.

California Statewide Financing Authority, Pooled Tobacco Securitization Program, series 2006

--$29,064,420 series 2006A turbo capital appreciation bonds due May 01, 2046 'BBB';

--$6,752,856 series 2006B turbo capital appreciation bonds due May 01, 2046 'BBB-';

--$23,149,900 series 2006C turbo capital appreciation bonds due May 01, 2055 'BB'.

The Children's Trust Fund (Puerto Rico), series 2002

--$11,460,000 serial bonds due May 15, 2008 'BBB';

--$5,000,000 serial bonds due May 15, 2009-1 'BBB';

--$6,975,000 serial bonds due May 15, 2009-2 'BBB';

--$11,315,000 serial bonds due May 15, 2010 'BBB';

--$4,000,000 serial bonds due May 15, 2011-1 'BBB';

--$8,135,000 serial bonds due May 15, 2011-2 'BBB';

--$13,805,000 serial bonds due May 15, 2012 'BBB';

--$423,290,000 turbo term bonds due May 15, 2033 'BBB';

--$310,380,000 turbo term bonds due May 15, 2039 'BBB';

--$296,255,000 turbo term bonds due May 15, 2043 'BBB'.

The Children's Trust Fund (Puerto Rico), series 2005

--$74,523,431 series 2005A capital appreciation bonds due May 15, 2050 'BBB-';

--$33,686,016 series 2005B capital appreciation bonds due May 15, 2055 'BB'.

City of San Diego Tobacco Settlement Revenue Funding Corporation, series 2006

--$105,400,000 series 2006 turbo term bonds due June 01, 2032 'BBB'.

District of Columbia Tobacco Settlement Financing Corporation, series 2001

--$5,800,000 serial bonds due May 15, 2008 'BBB';

--$6,285,000 serial bonds due May 15, 2009 'BBB';

--$6,840,000 serial bonds due May 15, 2010 'BBB';

--$7,140,000 serial bonds due May 15, 2011 'BBB';

--$7,145,000 serial bonds due May 15, 2012 'BBB';

--$8,030,000 serial bonds due May 15, 2013 'BBB';

--$8,360,000 serial bonds due May 15, 2014 'BBB';

--$114,855,000 turbo term bonds due May 15, 2024 'BBB';

--$169,110,000 turbo term bonds due May 15, 2033 'BBB';

--$187,540,000 turbo term bonds due May 15, 2040 'BBB'.

District of Columbia Tobacco Settlement Financing Corporation, series 2006

--$145,481,196 series 2006A turbo capital appreciation bonds due June 15, 2046 'BBB';

--$14,251,650 series 2006B turbo capital appreciation bonds due June 15, 2046 'BBB-';

--$55,868,400 series 2006C turbo capital appreciation bonds due June 15, 2055 'BB'.

Erie Tobacco Asset Securitization Corporation (New York), series 2005:

--$30,330,000 series 2005A current interest bonds due June 1, 2031 'BBB';

--$74,685,000 series 2005A current interest bonds due June 1, 2038 'BBB';

--$111,480,000 series 2005A current interest bonds due June 1, 2045 'BBB';

--$9,163,000 series 2005B first subordinate capital appreciation bonds due June 1, 2047 'BBB-';

--$12,565,080 series 2005C second subordinate capital appreciation bonds due June 1, 2050 'BB';

--$69,470,000 series 2005E taxable capital appreciation bonds due June 1, 2028 'BBB'.

Nassau County Tobacco Settlement Corporation (New York), series 2006:

--$42,645,000 series 2006A-1 taxable senior current interest bonds due June 1, 2021 'BBB';

--$37,905,609 series 2006A-2 senior convertible bonds due June 1, 2026 'BBB';

--$97,005,000 series 2006A-3 senior current interest bonds due June 1, 2035 'BBB';

--$194,535,000 series 2006A-3 senior current interest bonds due June 1, 2046 'BBB';

--$10,670,013 series 2006B first subordinate capital appreciation bonds due June 1, 2046 'BBB';

--$9,867,332 series 2006C second subordinate capital appreciation bonds due June 1, 2046 'BBB-';

--$37,604,290 series 2006D third subordinate capital appreciation bonds due June 1, 2060 'BB'.

Northern Tobacco Securitization Corporation (Alaska), series 2006:

--$117,510,000 series 2006A senior current interest turbo term bonds due June 1, 2023 'BBB';

--$70,105,000 series 2006A senior current interest turbo term bonds due June 1, 2032 'BBB';

--$212,270,000 series 2006A senior current interest turbo term bonds due June 1, 2046 'BBB';

--$8,668,052 series 2006B first subordinate turbo capital appreciation bonds due June 1, 2046 'BBB';

--$3,434,807 series 2006C second subordinate turbo capital appreciation bonds due June 1, 2046 'BBB-'.

New York Counties Tobacco Trust II (New York), series 2001

--$560,000 serial bonds due June 1, 2007 'BBB';

--$975,000 serial bonds due June 1, 2008 'BBB';

--$1,210,000 serial bonds due June 1, 2009 'BBB';

--$1,325,000 serial bonds due June 1, 2010 'BBB';

--$1,495,000 serial bonds due June 1, 2011 'BBB';

--$1,665,000 serial bonds due June 1, 2012 'BBB';

--$1,825,000 serial bonds due June 1, 2013 'BBB';

--$1,940,000 serial bonds due June 1, 2014 'BBB';

--$2,120,000 serial bonds due June 1, 2015 'BBB';

--$2,425,000 serial bonds due June 1, 2016 'BBB';

--$32,955,000 super sinker term bonds due June 1, 2025 'BBB';

--$68,005,000 super sinker term bonds due June 1, 2035 'BBB';

--$82,795,000 super sinker term bonds due June 1, 2043 'BBB'.

New York Counties Tobacco Trust III (New York), Tobacco Settlement Pass-Through Bonds, series 2003:

--$16,360,000 turbo term bonds due June 1, 2027 'BBB';

--$15,175,000 turbo term bonds due June 1, 2033 'BBB';

--$40,390,000 turbo term bonds due June 1, 2043 'BBB'.

New York Counties Tobacco Trust IV (New York), Tobacco Settlement Pass-Through Bonds, series 2005:

--$6,710,000 series 2005A turbo term bonds due June 1, 2021 'BBB';

--$4,520,000 series 2005A turbo term bonds due June 1, 2026 'BBB';

--$16,585,000 series 2005A turbo term bonds due June 1, 2038 'BBB';

--$84,975,000 series 2005A turbo term bonds due June 1, 2042 'BBB';

--$83,875,000 series 2005A turbo term bonds due June 1, 2045 'BBB';

--$52,450,000 series 2005B taxable turbo term bonds due June 1, 2027 'BBB';

--$124,400,000 series 2005C taxable turbo term bonds due June 1, 2041 'BBB';

--$10,277,849 series 2005D first subordinate turbo capital appreciation bonds due June 1, 2050 'BBB-';

--$14,073,539 series 2005E second subordinate turbo Capital appreciation bonds due June 1, 2055 'BB';

--$124,400,000 series 2010A turbo term bonds due June 1, 2041 'BBB'.

New York Counties Tobacco Trust V (New York), Tobacco Settlement Pass-Through Bonds, series 2005:

--$50,605,433 series 2005 S1 turbo capital appreciation bonds due June 1, 2038 'BBB';

--$43,529,858 series 2005 S2 turbo capital appreciation bonds due June 1, 2050 'BBB-';

--$25,917,083 series 2005 S3 turbo capital appreciation bonds due June 1, 2055 'BB'.

Rockland Tobacco Asset Securitization Corporation (New York), series 2005:

--$13,084,280 series 2005A first subordinate capital appreciation bonds due Aug. 1, 2045 'BBB-';

--$2,860,940 series 2005B second subordinate capital appreciation bonds due Aug. 1, 2050 'BB'.

Tobacco Settlement Financing Corporation (Louisiana), series 2001:

--$142,015,000 series 2001A taxable turbo term bonds due May 15, 2025 'BBB';

--$230,390,000 series 2001B tax-exempt turbo term bonds due May 15, 2030 'BBB';

--$689,405,000 series 2001B tax-exempt turbo term bonds due May 15, 2039 'BBB'.

Tobacco Settlement Financing Corporation (Rhode Island), series 2002:

--$109,770,000 series 2002A tax-exempt turbo term bonds due June 1, 2023 'BBB';

--$168,260,000 series 2002A tax-exempt turbo term bonds due June 1, 2032 'BBB';

--$371,700,000 series 2002A tax-exempt turbo term bonds due June 1, 2042 'BBB';

--$19,645,000 series 2002B taxable turbo term bonds due June 1, 2012 'BBB'.

Tobacco Settlement Revenue Management Authority (South Carolina), series 2001:

--$62,370,000 series 2001A taxable turbo term bonds due May 15, 2016 'BBB';

--$225,880,000 series 2001B tax-exempt turbo term bonds due May 15, 2022 'BBB';

--$347,625,000 series 2001B tax-exempt turbo term bonds due May 15, 2028 'BBB';

--$161,385,000 series 2001B tax-exempt turbo term bonds due May 15, 2030 'BBB'.

Tobacco Settlement Financing Corporation (Commonwealth of Virginia), series 2005:

--$34,425,000 turbo term bonds due June 1, 2013 'BBB';

--$51,585,000 turbo term bonds due June 1, 2019 'BBB';

--$104,020,000 turbo term bonds due June 1, 2026 'BBB';

--$252,345,000 turbo term bonds due June 1, 2037 'BBB'.

Tobacco Settlement Financing Corporation (New Jersey), series 2002:

--$20,180,000 serial bonds due June 1, 2008 'BBB';

--$7,240,000 serial bonds due June 1, 2009 'BBB';

--$13,285,000 serial bonds due June 1, 2009 'BBB';

--$7,235,000 serial bonds due June 1, 2010 'BBB';

--$13,755,000 serial bonds due June 1, 2010 'BBB';

--$1,410,000 serial bonds due June 1, 2011 'BBB';

--$20,080,000 serial bonds due June 1, 2011 'BBB';

--$4,805,000 serial bonds due June 1, 2012 'BBB';

--$17,220,000 serial bonds due June 1, 2012 'BBB';

--$22,590,000 serial bonds due June 1, 2013 'BBB';

--$23,200,000 serial bonds due June 1, 2014 'BBB';

--$23,845,000 serial bonds due June 1, 2015 'BBB';

--$7,090,000 serial bonds due June 1, 2016 'BBB';

--$17,535,000 serial bonds due June 1, 2016 'BBB';

--$55,310,000 fixed amortization term bonds due June 1, 2018 'BBB';

--$568,615,000 turbo term bonds due June 1, 2032 'BBB';

--$385,540,000 turbo term bonds due June 1, 2037 'BBB';

--$527,815,000 turbo term bonds due June 1, 2042 'BBB'.

Tobacco Settlement Financing Corporation (New Jersey), series 2003:

--$1,795,000 serial bonds due June 1, 2007 'BBB';

--$4,615,000 serial bonds due June 1, 2008 'BBB';

--$8,580,000 serial bonds due June 1, 2009 'BBB';

--$9,450,000 serial bonds due June 1, 2010 'BBB';

--$11,565,000 serial bonds due June 1, 2011 'BBB';

--$13,870,000 serial bonds due June 1, 2012 'BBB';

--$14,690,000 serial bonds due June 1, 2013 'BBB';

--$69,980,000 turbo term bonds due June 1, 2019 'BBB';

--$155,270,000 turbo term bonds due June 1, 2024 'BBB';

--$337,860,000 turbo term bonds due June 1, 2032 'BBB';

--$554,230,000 turbo term bonds due June 1, 2039 'BBB';

--$178,075,000 turbo term bonds due June 1, 2041 'BBB';

--$259,595,000 turbo term bonds due June 1, 2043 'BBB'.

Tobacco Settlement Asset Securitization Corporation (TSASC) 1999 Indenture, (New York City), series 2006-1:

--$284,070,000 turbo term bonds due June 1, 2022 'BBB';

--$137,765,000 turbo term bonds due June 1, 2026 'BBB';

--$372,650,000 turbo term bonds due June 1, 2034 'BBB';

--$599,025,000 turbo term bonds due June 1, 2042 'BBB'.

Tobacco Settlement Financing Corporation (US Virgin Islands), series 2006:

--$4,764,709 series 2006A subordinate turbo capital appreciation bonds due May 15, 2035, 'BBB';

--$512,471 series 2006B subordinate turbo capital appreciation bonds due May 15, 2035, 'BBB-';

--$867,690 series 2006C subordinate turbo capital appreciation bonds due May 15, 2035, 'BB'.

Westchester Tobacco Asset Securitization Corporation (New York), series 2005:

--$27,500,000 turbo term bonds due June 1, 2021 'BBB';

--$24,100,000 turbo term bonds due June 1, 2026 'BBB';

--$81,200,000 turbo term bonds due June 1, 2038 'BBB';

--$81,700,000 turbo term bonds due June 1, 2045 'BBB'.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.