CHICAGO — Fitch Ratings Friday downgraded a swath of tobacco bonds — stripping some of their investment-grade ratings — as part of its annual sector review amid continued consumption declines by smokers and a dispute between the tobacco companies and states that is diminishing annual payments.

Fitch downgraded 98 of its roughly 250 ratings of bonds backed by tobacco payments. All of the downgraded debt is either capital appreciation bonds or turbo-term bonds, which are typically more leveraged and exposed to declines in annual payments, Fitch said. The rating agency did not downgrade any serial bonds in the sector.

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