As the third quarter winds down, various states and counties across the country are in the process of putting finishing touches on tobacco settlement securitization transactions to create a flood of new issuance when fourth quarter begins.

Two deals are expected to price within the next few weeks, while October will see a bulk of the issuance.

Already out in the market is a $50 million deal from the state of Alabama, with Ala.-based bank Merchant Capital LLC serving as lead manager.

Deals that were recently printed include a transaction for approximately $30 million from Chautauqua County, N.Y., led by Morgan Stanley Dean Witter, and a $237 million deal from Erie County, N.Y. led by Salomon Smith Barney and Bear, Stearns & Co. Both deals are expected to price within the week.

Following the Erie County deal, a $100 million offering from Alaska Housing Finance Corp. for the state of Alaska is expected to come to market. Bear Stearns will lead that transaction.

Niagara County, N.Y. also has a deal in the works, but officials are not certain when to expect it.

The month of October will see the lion's share of issuance, as deals from Puerto Rico, San Diego and Sacramento are expected to enter the market. The $411 million Puerto Rico deal will be jointly led by Salomon and Bear. The Sacramento deal will be between $170 million and $175 million. The San Diego offering is not being led by major players, and is considered relatively minor.

Also, anywhere from 10 to 20 California counties are pooling together for a large offering to be priced some time in October. The issuance will be in the range of $100 million to $500 million, possibly more. The counties participating in the pool have not been set. The deal will be led by Salomon, with J.P. Morgan Securities and Sutro & Co. as co-leads.

The law firm of Orrick, Herrington & Sutcliffe LLP is serving as transaction counsel for the three California deals, as well as the Chautauqua deal in New York.

There are also some states that are preparing to look into securitizing their tobacco settlements. Recently, South Carolina and Iowa have put out request proposals for financial advisors. South Carolina can do its transaction without going back to legislature, but Iowa must get legislature approval before it can do another deal.

Furthermore, Brian Krolicki, treasurer of the state of Nevada, issued a statement last week that the state should securitize.

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