Golden State Tobacco Securitization

CUSIP: 38122NNZ1

NAME: Golden State Tobacco Securitization

COUPON: 5.00%

MATURITY: 6/1/2033

BONDHOLDER SECURITY:  asset securitization under the Master Settlement Agreement, (“MSA”). See Obligor Profile below.

USE OF BOND PROCEEDS: to refund prior issued 2003 Bonds, pay the state a portion of the purchase price of the 2003A Residual Certificate, fund a senior liquidity reserve, and pay for the costs of issuance.

RATINGS: B3 (Moody’s)

OBLIGOR PROFILE: The MSA was entered into on November 23, 1998, among the attorney generals of 46 states (including California), the District of Columbia, the Commonwealth of Puerto Rico, Guam, the U.S. Virgin Islands, American Samoa and the Commonwealth of the Northern Mariana Islands (collectively, the “Settling States”) and the then four largest U.S. tobacco manufacturers: Philip Morris Incorporated (“Philip Morris”), R.J. Reynolds Tobacco Company (“Reynolds Tobacco”), Brown & Williamson Tobacco Corporation (“B&W”) and Lorillard Tobacco Company (“Lorillard”). Philip Morris, Reynolds Tobacco, B&W and Lorillard are collectively referred to as the “Original Participating Manufacturers” or the “OPMs”). The MSA resolved cigarette smoking-related litigation between the Settling States and the OPMs and released the OPMs from past and present smoking-related claims and provides for a continuing release of future smoking-related claims, in exchange for certain payments to be made to the Settling States. The MSA payments were set at roughly $9.0 billion per year over all 46 participating states, subject to annual adjustments for US cigarette consumption, inflation and other variables. Various state have securitized their share of the MSA payment, thus creating the Municipal Bond Sector for Tobacco Bonds. The ratings for these securities among other things reflect the structure of the asset securitization as it relates to asset-back rating criteria and the creditworthiness of the corporations in question.

(Source: Official Statement, dated March 5, 2007)


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