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Tobacco Bond Risk Eases as Supreme Court Rejects Damages Bid  

The cost to protect against losses on bonds of Altria Group Inc. and Reynolds American Inc. fell after the U.S. Supreme Court rejected the Justice Department's bid for as much as $280 billion in tobacco company profits.

Credit-default swaps on Altria Group and Reynolds American, the largest cigarette makers, dropped the most in at least a year. The high court's refusal to hear an Obama administration appeal made it likely the racketeering suit first pressed by former President Bill Clinton's administration won't result in financial penalties against Altria's Philip Morris USA and R.J. Reynolds Tobacco Co.

Altria and Reynolds are "the biggest movers by a mile after the Supreme Court ruling on damages," Tim Backshall, chief strategist at Credit Derivatives Research LLC in Walnut Creek, California, wrote in an e-mail.

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