New York's Suffolk Tobacco Asset Securitization Corp. expects to go to market with its first deal by the end next month, according to its chairman.
As of Friday, the deadline for responses for a request for proposals for underwriters, the corporation had received seven responses for a deal that is intended to provide Suffolk County with $175 million in bond proceeds, STASC chairman Jim Morgo said. Morgo also serves as chief deputy to County Executive Steve Levy.
STASC expects to choose an underwriter by the end of this month, he said.
Hawkins, Delafield & Wood LLP is bond counsel and Capital Markets Advisors LLC is financial adviser.
The county, which is situated on the eastern end of Long Island, hasn't decided how it will spend the proceeds of the securitization, but uses could include funding capital projects of the county and refunding or defeasing the county's general obligation debt, according to the RFP. Difficult economic times have created a projected $130 million to $150 million budget gap for the county in 2009 and pushed it to take the tobacco securitization route, Morgo said.
"We're facing a very large budget hole for next year," Morgo said. "The county executive doesn't want to raise taxes."
The tobacco securitization is just one part of what the county is doing to deal with its shorftall, he said.
County Comptroller Joseph Sawicki said the county will use the tobacco securitization to make up about half of its gap, according to the Long Island Business News.
STASC, which was created by the county legislature in March and held its first meeting last month, will use the bond proceeds to purchase the county's rights, title, and interest to its share of the payments from the Master Settlement Agreement entered into in 1998 between most states and the four largest tobacco manufacturers in the country.