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• Virginia Deal the Latest Sign of Tobacco's Return 

In early 2003, litigation against the nation's big tobacco companies and the fear that Philip Morris USA could be headed for bankruptcy put tobacco bond deals on ice for a while.

Time, it seems, has calmed some of those fears, and Virginia will sell its $1.1 billion of tobacco bonds tomorrow into a market much friendlier toward tobacco than it was when the state first tried in 2003.

Though marketing a tobacco deal is still a long and involved process, the strategy of selling tobacco bonds now requires fewer dealings with investors worried about the bonds' credit, bankers and advisers said in interviews this week. The most important thing to do when planning a tobacco sale is to steer clear of the market when it is flush with tobacco paper, they said.

Two of the largest deals sold this year have been tobacco bonds, with New Jersey's $3.6 billion sale going Jan. 23, and California's $4.4 billion pricing March 8. . . .

As Virginia prepares to sell $1.1 billion of debt, the state hopes to tap into the demand that met the $8 billion of tobacco bonds already sold this year, according to Steven Kantor, managing director for First Southwest Co. and Virginia's financial adviser on the tobacco deal. He also advised on the New Jersey sale.

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