Louisiana State Treasurer John N. Kennedy wants a special meeting of the State Bond Commission to reconsider the state's proposed refunding of $628 million of tobacco settlement revenue bonds.

"I want a meeting of the Bond Commission to determine if we want to do this deal at all," Kennedy said Wednesday. "Right now, we need a public discussion on this."

The negotiated refunding by Louisiana Tobacco Settlement Financing Corp. was set for this week on a day-to-day basis, but has been withheld since Monday due to turmoil in the municipal market place.The estimated savings from the refunding of $143 million in the first three years has dwindled to approximately $65 million, Kennedy said.

"Yesterday was even worse," Kennedy said Wednesday. "It was closer to $60 million. This market is a doozy."

The treasurer was on the losing end of the 12-1 State Bond Commission vote June 6 to structure the tobacco deal to focus on obtaining short-term savings.

The state intends to go ahead with the sale while keeping a close eye on market conditions, said Commissioner of Administration Kristy Nichols, who chairs the tobacco settlement panel.

"We are confident that we will get the year-one savings that was budgeted for fiscal 2014," she said.

"I have been given delegated authority over the transaction, but even so I am convening daily calls among the executive committee, to keep everyone apprised of the situation, and to look at the pricing and precise out-year savings levels so that we can make informed decisions for the good of the state," Nichols said.

The Bond Commission cannot meet until July 8, Kennedy said.

If the tobacco settlement revenue bonds go to market before then, Kennedy said, he will ask Commission director Whit Kling to prepare a report on the issue for bond commissioners.

"I can't imagine anyone wanting to go to market in this environment," Kennedy said. "Only fools buy when things when prices are high and sell when they are low.

"And I can't imagine going to market next week, when so many of the financial community are going to be on vacation due to the (July 4th) holiday," he said. "If they do, they are leaving money on the table."

A public discussion is needed, Kennedy said.

"They need to tell the taxpayers of Louisiana and the Legislature about these savings," he said. "We only get one shot at this refunding."

The estimated $143 million of up-front savings over the next three fiscal years is dedicated to a popular college scholarship program. The fiscal 2014 budget adopted recently by the Legislature includes $60 million of the savings from the refunding.

Savings from the refunding were estimated at $67.2 million in fiscal 2014, $57.3 million in 2015 and $18.3 million in 2016.

Citi is the senior bookrunner with Jefferies as co-senior manager.

Co-managers include Bank of America Merrill Lynch, Raymond James, Stephens Inc., Southwest Securities, Williams Capital Group, and Siebert Brandford Shank and Co.

Public Resources Advisory Group is financial advisor to the tobacco finance panel.

Foley & Judell and Hawkins Delafield & Wood are co-bond counsels.

The bonds will refund bonds issued in 2001 supported by the state's share of the 1998 Master Settlement Agreement with the tobacco companies. Louisiana securitized 60% of its payments with $1.2 billion of taxable and tax-exempt bonds.

The refunding has been approved by the tobacco settlement board, the Bond Commission, and the Joint Legislative Committee on the Budget.

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