E-cigarettes growth could pose risk to tobacco bonds sooner, Reuters says
The escalating growth of electronic cigarette sales poses an increased but under-appreciated risk to holders of as much as $96B of bonds linked to payments that tobacco companies make to U.S. states from a sweeping legal settlement sixteen years ago, reported Reuters. As smokers switch out traditional cigarettes for tobacco-free e-cigarettes, the smoking rate is falling even quicker and analysts now foresee some bonds could go into default before the end of 2020. Publicly traded companies in tobacco industry include Altria Group (MO), British American Tobacco (BTI), Lorillard (LO), Philip Morris (PM) and Reynolds American (RAI).
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