Another Big Tobacco Bond Deal, Cajun Style - ProPublica
The allure of tobacco bonds appears to have won over another customer - cash-strapped Louisiana.
Gov. Bobby Jindal, a potential GOP presidential candidate, is scrambling to deal with a $1.6 billion hole in his next budget. Now, over the opposition of the state’s treasurer, Jindal has lined up a $750 million deal to borrow against future income from the state’s share of a 1998 legal settlement with cigarette makers.
We’ve covered tobacco bond deals in depth, most recently focusing on a handful of deals to bail out these costly debts held by many state and local governments.
New Jersey, Rhode Island and two New York counties have rescued failing bonds in the past year. In New Jersey’s case, a tobacco bond bailout turned a profit of more than $100 million for a hedge fund in middle of the deal. Six more New York counties have OK’d similar transactions.