Moody's Investors Service last week downgraded $1.1 billion of New Jersey cigarette tax bonds to Baa3 from Baa2. The outlook is negative.

The downgrade is due to cigarette consumption declining faster than anticipated. From 1997 to 2009, cigarette sales in New Jersey dropped by an average rate of 6% per year. If that continues, debt service coverage will be less than one times in 2018.

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