OREANDA-NEWS. Fitch Ratings assigns the following ratings and Rating Outlooks to the series 2015A&B bonds issued by the Tobacco Settlement Financing Corporation (Rhode Island):

--\$5,000,000 series A taxable serial bond due June 1, 2015 'BBB+sf'; Outlook Stable;
--\$10,255,000 series A taxable serial bond due June 1, 2016 'BBB+sf'; Outlook Stable;
--\$895,000 series A serial bond due June 1, 2016 'BBB+sf'; Outlook Stable;
--\$11,335,000 series A serial bond due June 1, 2017 'BBB+sf'; Outlook Stable;
--\$10,220,000 series A serial bond due June 1, 2018 'BBB+sf'; Outlook Stable;
--\$10,580,000 series A serial bond due June 1, 2019 'BBB+sf'; Outlook Stable;
--\$11,020,000 series A serial bond due June 1, 2020 'BBB+sf'; Outlook Stable;
--\$11,505,000 series A serial bond due June 1, 2021 'BBB+sf'; Outlook Stable;
--\$12,040,000 series A serial bond due June 1, 2022 'BBB+sf'; Outlook Stable;
--\$12,635,000 series A serial bond due June 1, 2023 'BBB+sf'; Outlook Stable;
--\$13,290,000 series A serial bond due June 1, 2024 'BBB+sf'; Outlook Stable;
--\$14,020,000 series A serial bond due June 1, 2025 'BBB+sf'; Outlook Stable;
--\$14,810,000 series A serial bond due June 1, 2026 'BBB+sf'; Outlook Stable;
--\$15,325,000 series A serial bond due June 1, 2027 'BBB+sf'; Outlook Stable;
--\$14,900,000 series A serial bond due June 1, 2028 'BBB+sf'; Outlook Stable;
--\$14,530,000 series A serial bond due June 1, 2029 'BBB+sf'; Outlook Stable;
--\$14,215,000 series A serial bond due June 1, 2030 'BBB+sf'; Outlook Stable;
--\$68,110,000 series A term bond due June 1, 2035 'BBB+sf'; Outlook Stable;
--\$67,615,000 series A term bond due June 1, 2040 'BBB+sf'; Outlook Stable;
--\$81,685,000 series B turbo bond due June 1, 2041 'BBB+sf'; Outlook Stable;
--\$85,820,000 series B turbo bond due June 1, 2045 'BBB+sf'; Outlook Stable;
--\$121,130,000 series B turbo bond due June 1, 2050 'BBB+sf'; Outlook Stable.

The initial structure that Fitch assigned expected ratings to on March 3 has been updated with one extra class (the \$10,255,000 series A taxable serial bond due June 1, 2016) and the maturity date of the series B turbo bond due June 1, 2040 was revised to 2041 from 2040.

KEY RATING DRIVERS

Tobacco Industry Rating: Cash flows to the bond trustee are dependent on the Master Settlement Agreement (MSA) payments made by the tobacco companies. As a result, tobacco settlement ABS is capped at 'BBB+sf', which is one notch above Fitch's view of the tobacco industry.

Transaction Structure: The capital structure of the 2015A&B bonds as well as credit enhancement in the form of a debt service reserve account is adequate.

Resolution of Pending Litigation: At its meeting on July 15, 2014, the corporation's board approved resolutions authorizing the issuance of bonds: (1) finance a payment to the state in an amount not less than \$20 million; (2) refund all the corporation's outstanding tobacco settlement ABS, series 2002A; (3) fund the open market purchase of certain maturities of the corporation's outstanding series 2007 bonds accepted for purchase by the corporation; (4) make deposits to the debt service reserve accounts with respect to the 2014 (now 2015) bonds; and (5) pay related costs of issuance.

On Aug. 4, 2014, certain holders of the series 2007 bonds and related entities filed a complaint in Rhode Island Superior Court, and later amended that complaint, alleging that the proposed 2014 transaction would violate Rhode Island state law and provisions of the 2007 Indenture (the Litigation).

On Jan. 15, 2015, the court entered a written order granting summary judgment in favor of the corporation and the state as to all claims against all defendants in the Litigation.

On Jan. 23, 2015, the court also entered final judgment in favor of all defendants as to all claims in the Litigation.

On Feb. 10, 2015, the plaintiffs filed a notice of appeal (Notice of Appeal) to the Supreme Court of Rhode Island that appeal is pending.

In connection with the pricing, sale and closing of the series 2015 bonds, the corporation and the plaintiffs and certain other entities have entered into a Settlement Agreement agreeing to resolve with finality the Litigation. On Feb. 27, 2015, the plaintiffs and the corporation signed and provided to an independent, third-party escrow agent: (1) a fully executed Stipulation of Dismissal With Prejudice, dismissing, with prejudice, all of the claims and counterclaims in the Litigation (the Stipulation of Dismissal With Prejudice); and (2) a fully executed Withdrawal of Notice of Appeal, withdrawing plaintiffs' Notice of Appeal. On the date of closing of the series 2015 bonds, prior to and as a condition to the closing of such bonds, the Stipulation of Dismissal With Prejudice and Withdrawal of Notice of Appeal will be filed with the applicable court, and, only after receiving evidence of such filings, the series 2015 bonds will subsequently be issued and delivered to the underwriter.

RATING SENSITIVITIES

Fitch runs different declines in MSA payment scenarios when evaluating the rating sensitivity for tobacco settlement ABS. Even in the most severe stressed scenario of a 30% one-time decline in the MSA payment there is no rating migration among the serial bonds. All term bonds would be downgraded in the severe stress of a 30% MSA decline. For further discussion of Fitch's sensitivity analysis, please see the related presale report.