New York City is joining the parade of municipalities looking to refinance their tobacco bonds.
TSASC, a local development corporation, is preparing to issue $1.024 billion of debt secured by tobacco settlement revenues, which cigarette companies pay as part of their 1998 settlement with 46 states, including New York.
Standard & Poor’s expect to assign ratings ranging from single-A to BBB+ to $584.38 million and ratings of BBB to $440 million of series 2017B subordinated turbo bonds. There are also $200 million of series 2017B bonds maturing in 2052 that S&P will not rate.
Jefferies LLC is book-running lead manager, with Citigroup and Siebert Cisneros Shank & Co. LLC additional lead managers for the negotiated sale.
The proceeds of the 2017 bonds, along with other funds, will be used to refund all of the existing TSASC's outstanding senior bonds, fund the senior and subordinate liquidity reserve accounts, and pay costs related to the issuance.
New York State is entitled to 12.762% of the total amount of annual payments deposited in the national escrow account, and 26.67% of this goes to New York City; the TASC bonds will be receive 37.4% of New York City’s allotment. The remaining 62.600% is not pledged and is not available to the bondholders, and the trustee has no rights to these funds under any circumstance.
-Paul Burton contributed to this report.