Louisiana Mulls $624M Tobacco Deal

DeSue, Tedra
May 2003
Bond Buyer;5/29/2003, Vol. 344 Issue 31645, p1
Trade Publication
Louisiana legislators are considering a bill that would allow the state to securitize the remainder of its national tobacco settlement revenue, officials say any such deal will not happen until the market for such debt improves. Once the lowest-rated state in the country, taking a calculated risk with a tobacco securitization helped improve Louisiana's finances and its bond ratings. Issuance of tobacco bonds has since peaked, as investors began to worry that lawsuits against major tobacco companies could be successful and the companies could go bankrupt before they pay off what they owe under the Master Settlement Agreement negotiated with states in 1998. As a result of setbacks in some lawsuits, rating agencies downgraded tobacco bond debt and investors have demanded that future sales be backed with something other than just tobacco revenues.


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