California completes sale of bonds
The state of California completed its sale of $2.5 billion of bonds Wednesday, paying a yield of 4.78% for the securities that mature the latest.
On the first two days of the three-day sale, individual investors placed orders equal to 27.6% of the total offering. Institutional investors competed in an auction Wednesday to buy the remaining bonds.
Underwriters hired by the state got enough demand from individuals to enable them to raise prices and lower yields by as much as 0.08 of a percentage point on bonds with earlier maturities. Yields on bonds maturing in 2037 were lifted 0.03 of a percentage point Wednesday, compared with the pricing for individual investors.
Individual investors bought up all the bonds that mature from 2009 through 2017, said Tom Dresslar, spokesman for state Treasurer Bill Lockyer.
The state treasurer’s office, in the latest bond offering documents, said sales of new general obligation and lease revenue bonds would “increase substantially” in the fiscal year that begins July 1.
As with the U.S. municipal market as a whole, tax-exempt bond issuers in California are poised to have their biggest year for debt sales in calendar 2007. The record was $58 billion in 2003, data compiled by Thomson Financial show.
Including this week’s planned sales, issuance from California is at $34 billion so far in 2007, based on Bloomberg data. If new bonds come to market at the same rate as they have since the beginning of this year, California will finish with almost $70 billion.
California carries A-plus and A1 ratings from Standard & Poor’s and Moody’s Investors Service, respectively. About a third of the deal was insured by five different guarantors, lifting the bonds’ ratings to AAA and Aaa.
