Slowing cigarette sales could put Virginia tobacco bond payments at risk

[Nate760]

Tobacco industry: Slowing cigarette sales could put Virginia tobacco bond payments at risk - Daily Press

It's nice to see this subject (which is the true dark underbelly of state government anti-vaping efforts) finally starting to bubble up in the media. I maintain that it's going to be a gigantic freaking scandal before all is said and done, as well it should be. Highlights:

The Settlement Financial Corp. paid Virginia more than $1 billion in return for half the tobacco companies' annual payments to the state. To finance that payment, the Settlement Financial Corp. sold bonds – it raised about $1.2 billion in 2007 by selling bonds with a face value of just over $2 billion, but marketing them at a deep discount to that face value. That translated to a return to investors of nearly 9 percent on its tax-exempt bonds – about twice the rate on U.S. Treasury bonds – and nearly 11.7 percent on its taxable bonds, assuming they are repaid in full in 2047.

Virginia's not alone. In a recent report, Moody's Investor Services estimated that 80 percent of the $97 billion that states raised by selling similar bonds won't be repaid in full if cigarette sales slow even more.

New Jersey took that third step in March, pledging to pay investors in its tobacco bonds the remaining $60 million a year in tobacco settlement funds that it had been using for other state spending, such as the health programs the settlement was originally designed to fund.

Yes, you read the bold part right. Fully 45% (I repeat, FORTY FIVE PERCENT) of the total payments to be delivered over the lifetime of the TMSA (1998-2023) have already been hedged by the states on bond issues, and/or sold to private investors.

 

[Papa_Lazarou]

Interesting to note that the bond analysts claim e-cigarette uptake was key to the precipitous decline last year.

I wonder just how egregious a conflict of interest would have to be before legislative action against vaping was ruled invalid.

 

[Jingles]

I don't understand all the bond stuff, but I hope they are happy that they shamed me and many like me into not smoking. What did they expect when they told me I couldn't smoke at an outdoor baseball park? I think they overplayed their hand or overestimated how stupid we were...we're Americans (and Chinese and Europeans, etc)..we are smart enough to come up with a solution to the problem they created for us!

 

[AndriaD]

I don't understand all the bond stuff, but I hope they are happy that they shamed me and many like me into not smoking. What did they expect when they told me I couldn't smoke at an outdoor baseball park? I think they overplayed their hand or overestimated how stupid we were...we're Americans (and Chinese and Europeans, etc)..we are smart enough to come up with a solution to the problem they created for us!

...and show them up for the crooked embezzlers they are. They've basically made their very own Ponzi scheme out of the MSA, and now that tobacco sales are falling, so is the Ponzi scheme -- as all Ponzi schemes inevitably do.

Andria

 

[Kent C]

...and show them up for the crooked embezzlers they are. They've basically made their very own Ponzi scheme out of the MSA, and now that tobacco sales are falling, so is the Ponzi scheme -- as all Ponzi schemes inevitably do.

Andria

I'm hoping that Zeller, Glantz, et. al. (and Harkin, Rockefeller, Durbin, Boxer, etc.) invested their IRAs in Settlement bonds Another 'sure bet' is a black swan event and has become true 'vaporware'. The 'cigarette bubble' burst by an atomizer coil

 

[BigD43]

I just find it funny now how the major cig company's are trying to cut in on the vaping industry. I was in the local circle K ( convince store ) and some sales rep for camel tried giving me a vuse for free and I showed her my leemer . She was like what is that and I had to show her what was up. She told me that Marlboro is gonna be coming out with an ecig too. That means all 3 major cig companies will have their own ecig. All I can say is the vaping community has done some major damage to the multibillion dollar scam artist/cig companies. Vape on vapers!

 

[DrMA]

$97 billion is a big enough chunk of change to provide motivation for all manner of unspeakable crimes against humanity for these folks. And remember that the most populous states are affected to a greater degree by the declining TMSA payments. Therefore the extra nasty prohibition and/or taxation campaigns in CA, NY, NJ...

 

[Kent C]

wiki:
"If the number of cigarettes sold by an OPM (Original Participating Manufacturers), in a given year is less than the number it sold in 1997, the Volume Adjustment allows that OPM to reduce its payment to the settling states. In other words, a reduction in the amount of cigarettes sold by the OPMs results in the settling states receiving less money."

The money saved can be a good investment in ecigs to save even more money.... iow, they benefit by ecig/eliquid sales by more than one way.

 

[Anjaffm]

excellent find, Nate!

 

[Harlen]

They turn you into a pariah cast you out side to smoke and then think that they can charge you $8-$15 dollars a pack and that's okay we're gonna keep on buying well surprise NOT.
Vape on

 

[twgbonehead]

But but but....

The states are saving even more money by the reduced health-care costs, right? After all haven't they been constantly citing "Increased health-care costs due to smoking-related issues" as the main justification for taxing the hell out of cigarettes????

(My guess all along is that this argument was a sham, and that there really is little or no difference between health-care costs for smokers vs. non-smokers in the long term)

 

[Nate760]

(My guess all along is that this argument was a sham, and that there really is little or no difference between health-care costs for smokers vs. non-smokers in the long term)

Who costs the state more money in their lifetime, 1) a person who lives to age 90 and collects Social Security/Medicare for 25 years, or 2) a person who dies at or near age 65 and never collects either one?

 

[skoony]

good find Nate.
i am not sure how it works hear as Minnesota is one of three states with a
separate agreement. i believe Smokefree Minnesota (the nonprofit propaganda arm of the state)
receives some monies and the rest goes into the general fund.
i myself like most people have yet to see an invoice,purchase order or bill
showing Minnesota or any other state for that matter has actually paid any
medical expenses of any sick smoker.

regards
mike

 

[AndriaD]

wiki:
"If the number of cigarettes sold by an OPM (Original Participating Manufacturers), in a given year is less than the number it sold in 1997, the Volume Adjustment allows that OPM to reduce its payment to the settling states. In other words, a reduction in the amount of cigarettes sold by the OPMs results in the settling states receiving less money."

The money saved can be a good investment in ecigs to save even more money.... iow, they benefit by ecig/eliquid sales by more than one way.

I've been saying that for a while now, after reading up on that MSA, but nobody was paying me the least bit of attention. It's BP (and the gov't of course) we need to be afraid of, not BT with their ultra lame "e-cigarettes" -- most of us have figured out that e-cigarettes are ALL "starter kits," to progress to APVs -- they're "proof of concept," to show us what vapor can do, so we don't feel so odd ponying up a bit more for a real APV.

Of course, all that is only true if the FDA is unconvinced by BT's hypocritical, self-serving arguments about "open containers". Given that the gov't wants our money so badly, I'm thinking they may allow ANY containers, as long as they get a piece of the action.

Andria

EDIT: that above that I quoted also makes me wonder if, before this is done, we'll start seeing a reduction in the taxes on cigarettes, as the states attempt to sell more of them, so they can keep milking the MSA cow.

 

[Bill Godshall]

About a dozen states decided to sell some of their future tobacco settlement payments (for lots of up front cash) to bond holders. The other states wisely chose not to do so.

Please note that the state tobacco settlement payments (made by participating cigarette companies) will continue to be made to states forever (i.e. they don't stop after 25 years, as some have mistakenly claimed).

 

[Uma]

Who costs the state more money in their lifetime, 1) a person who lives to age 90 and collects Social Security/Medicare for 25 years, or 2) a person who dies at or near age 65 and never collects either one?

I hear this often & it could be true, but with all the junk science out there we'll never know the truth until we ask St. Peter at the pearly gates.
The oldest people recorded have mostly all been smokers.
The smoke acts as a buffer against viral and yes, even lung disease.
Happiness, contentment, is the leading cause of long life.
CDC claimed that over 400,000 smokers die every year, but don't mention the 2.4 million non-smokers who die every year.
Doctors were told to ask patients if they smoked. They never asked about travel, nuclear fall outs, all the typical life stuff we face.
Smoking is down but cancer is up....
Lung cancer is higher in countries with never smokers.
Smoking morticians were the only morticians who survived the Black Plague, smoking (nicotine) is beneficial in many ways.
Vaping is magnitudes safer than smoking, yet according to many calculations smoking is magnitudes safer than smog, cooking, etc...

Sorry for the ramble. Just too many thoughts flying through my brain and need a place to land.

 

[Uma]

Tobacco industry: Slowing cigarette sales could put Virginia tobacco bond payments at risk - Daily Press

It's nice to see this subject (which is the true dark underbelly of state government anti-vaping efforts) finally starting to bubble up in the media. I maintain that it's going to be a gigantic freaking scandal before all is said and done, as well it should be. Highlights:







Yes, you read the bold part right. Fully 45% (I repeat, FORTY FIVE PERCENT) of the total payments to be delivered over the lifetime of the TMSA (1998-2023) have already been hedged by the states on bond issues, and/or sold to private investors.

This article completely embarrasses the Slantz brigade who have been caught blaming lack of funds for their torment campaign these last few years. He as well as admitted the TC hasn't been doing their job. Ha!
There was an article like this about calif no too long ago, anybody remember the link?

 

[Kent C]

I hear this often & it could be true, but with all the junk science out there we'll never know the truth until we ask St. Peter at the pearly gates.
The oldest people recorded have mostly all been smokers.
The smoke acts as a buffer against viral and yes, even lung disease.
Happiness, contentment, is the leading cause of long life.
CDC claimed that over 400,000 smokers die every year, but don't mention the 2.4 million non-smokers who die every year.
Doctors were told to ask patients if they smoked. They never asked about travel, nuclear fall outs, all the typical life stuff we face.
Smoking is down but cancer is up....
Lung cancer is higher in countries with never smokers.
Smoking morticians were the only morticians who survived the Black Plague, smoking (nicotine) is beneficial in many ways.
Vaping is magnitudes safer than smoking, yet according to many calculations smoking is magnitudes safer than smog, cooking, etc...

Sorry for the ramble. Just too many thoughts flying through my brain and need a place to land.

Re: bold ... AND lower incidence of lung cancer in the highest smoking per capita (males) - Japan ... at one time.

 

[DrMA]

This article completely embarrasses the Slantz brigade who have been caught blaming lack of funds for their torment campaign these last few years. He as well as admitted the TC hasn't been doing their job. Ha!
There was an article like this about calif no too long ago, anybody remember the link?

From my collection of related articles:
http://www.nytimes.com/2012/05/04/b...-tobacco-payments-in-jeopardy-of-default.html
Tobacco Bonds Feel Heat From E-Cigarettes - WSJ
http://finance.yahoo.com/news/e-cigarettes-could-stub-tobacco-110000689.html

 

[TyPie]

Who costs the state more money in their lifetime, 1) a person who lives to age 90 and collects Social Security/Medicare for 25 years, or 2) a person who dies at or near age 65 and never collects either one?

My sentiments exactly. The argument that smokers cost the state more in health care is a convenient excuse and a sham.