Tobacco bonds may be on their way to the biggest volume since 2007, led by Wednesday's $1.7 billion sale from California, as issuers take advantage of historically low interest rates to refinance.

Amid a decline in smoking that's cut deeply into revenue, tobacco bond issuance this year is also highlighted by a $621 million sale last month in Rhode Island and a possible $875 million deal from Louisiana later in 2015.

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