The State of Washington is planning to issue $344.39 million of bonds backed by tobacco settlement revenues, according to a presale report by Standard & Poor’s.
Barclays is the lead underwriter for the deal, Tobacco Settlement Authority Series 2013, which is backed by 29.2% of the state’s share of revenues from the Master Settlement Agreement after July 2003.
The trust will issue 22 classes of notes with maturities ranging between 2014 and 2036. S&P has assigned preliminary ratings of ‘A’ to the notes maturing in 2023 or earlier and ‘A-‘ to the notes maturing between 2024 and 2032 and ‘BBB+’ to notes maturing in 2036, citing additional risks to cash flow.
“We believe that the preliminary ratings on the bonds with longer maturity profiles should be more closely tied to the tobacco industry's business risk profile and the current ratings on the three largest tobacco manufacturers,” the report stated.