State to sell $1.7 billion in bonds this week

California plans to sell a total of $1.7 billion in general obligation bonds this week to fund capital-spending projects and housing programs, as the state works through a huge backlog of bond issues authorized by voters.

Treasurer Bill Lockyer expects to sell $1.1 billion in bonds Wednesday to pay for schools, libraries, water projects and other infrastructure improvements. Interest on those securities will be exempt from state and federal income tax.

Thursday the state plans to sell $625 million in bonds whose interest will be exempt from state income tax but not federal tax. The proceeds are to fund housing projects authorized under a proposition voters approved in 2002.

The $1.1-billion offering will include bonds maturing each year through 2036. The $625-million deal will consist of bonds maturing through 2014.

Demand for the bonds Wednesday should mirror the investor interest seen during other recent sales by California of its general obligation debt, said Parker Colvin, a managing director at Stone & Youngberg, an investment bank in San Francisco.

The yield on fully tax-exempt California bonds maturing in five years was 3.77% on Monday, according to a Bloomberg index. The yield on 10-year bonds was 4.03%.

The state had $49 billion in general obligation bonds outstanding as of Jan. 1. The total of bonds authorized by voters but not yet issued is $72 billion.

Moody’s Investors Service on Friday assigned an A1 rating and stable outlook to both of this week’s bond deals. Standard and Poor’s rates the state’s general obligation debt A-plus.