Deutsche Bank recently closed LSMFT-1, a $308 million deal backed by the litigation fees associated with the tobacco master settlement (MSA).
The much-anticipated deal breaks ground on several levels. It is the first securitization of legal fees associated with the MSA, and it's the first taxable deal arising from the MSA, said Michael Raynes, a managing director at Deutsche.
According to market sources, the Rule 144A placement priced at plus 360 on the double-As, and plus 600 on the single-As. Despite the apparent wide levels, it is understood that the deal was well executed and oversubscribed.
Industry sources said the next MSA litigation deal should hit the market by the end of the first half. LSMFT represents the aggregate value of $1 billion in fees via 11 law firms. There is another $10 billion or so in nominal fees associated with the MSA that have yet to be securitized, although sources anticipate a substantial portion of that total will be structured into deals.
LSMFT was conceived almost 18 months ago. The mandate was originally awarded to Morgan Stanley Dean Witter, but, following an investment banking tug-of-war, Deutsche scored the deal six months back.
Interestingly, LSMFT, which is acronym for Litigation Settlement Monotized Fees Trust, is also an acronym for an old cigarette slogan: Lucky Strike means fine tobacco.