Briefly

Municipal bond investors’ appetite for California securities will be tested today, when the University of California sells $1.3 billion of bonds to refinance existing debt and pay for campus improvements.

The university system’s credit rating recently was lowered one notch to AA-minus, the fourth-highest level, by Standard & Poor’s because California cut education spending to help close a $38-billion budget gap. Moody’s Investors Service rates the university’s debt Aa2, the third-highest level.

But the university plans to privately insure the new bonds against default to attain top AAA ratings, analysts said.

The state’s general obligation debt is rated lowest of any state.

Brokerage Lehman Bros. will manage the UC bond deal.

From Bloomberg News