S&P monitoring tobacco-deal effects on ratings

Fri Dec 21, 2012 1:54pm EST

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Dec 21 (Reuters) - Standard & Poor's Ratings Services on Friday said it is monitoring terms agreed by U.S. cigarette makers and 17 states, the District of Columbia, and Puerto Rico meant to resolve a high-stakes dispute over payments from landmark 1998 litigation.

"This term sheet agreement ... could affect the U.S. tobacco settlement-backed securitizations that Standard & Poor's rates," said the Wall Street agency, which rates 267 tranches in 50 tobacco securitizations.

The settlement announced on Tuesday gives states a share of $4 billion in disputed payments currently held in escrow. The manufacturers will receive credits against future payments. 

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