Louisiana State Treasurer John Kennedy said the state will refinance $1.1 billion of tobacco settlement bonds to generate funds to aid small business damaged by Hurricane Katrina.
The tobacco refinancing plan follows similar moves in several other states.
The state will seek to restructure its tobacco financing by extending the bonds’ planned amortization by five years, to 2025. The refinancing is expected to generate up to $270 million for loans to strengthen small businesses damaged by Hurricane Katrina.
The refinancing will retire the currently outstanding tobacco settlement bonds issued in 2001. At that time, Louisiana sold 60 percent of its future tobacco settlement revenues through the Tobacco Settlement Financing Corporation in return for an upfront payment of $1.1 billion.
The Louisiana plan follows similar announcements from New Jersey and Iowa, which expect to be refinancing tobacco settlement debt in the near future. Successful refundings have already been completed by the state of California and several New York counties.
