SAN DIEGO – About $100 million in bonds backed by tobacco settlement revenues were sold on Wall Street Thursday with the proceeds to reduce the deficit in San Diego's retirement system, the mayor's office announced.

The yield to investors on the bond sale was 7.125 percent, lower than the 7.2 percent reported to the City Council when it approved the transaction in late April, according to Mayor Jerry Sanders' office.

The proceeds are expected to be wired into the San Diego City Employees' Retirement System next Wednesday, according to the mayor's office.

Jay Goldstone, the city's chief financial officer, told the council in April the loan will be paid off over the next 18 years with money the city gets from its share of funds collected from the settlement of a lawsuit against tobacco manufacturers.

The settlement money is supposed to be used to fund health care programs, but many municipalities are using it for other purposes, including securing bonds.

Sanders previously described the bond sale as a “critical” first step to addressing a $1.4 billion shortfall in the municipal retirement system.

The $100 million was also factored into the recent settlement of a lawsuit brought by retiree William McGuigan, who claimed the city didn't pay its full contribution into the retirement system between 1996 and 2002.

Under the terms of the settlement, the city will receive credit for the $100 million through the bond sale. An additional $73 million must be paid into the pension system over the next five years.