SAN FRANCISCO, Oct 22 (Reuters) - California sold $2.28 billion of its general obligation bonds after institutional investors scooped up the debt on Tuesday, the state’s treasurer’s office said.
The state began its sale with a retail order period on Monday, offering $2.2 billion of its GO bonds. Retail investors ordered $563 million of the debt, or about 27 percent of $2.09 billion in tax-exempt bonds sold.
Final yields for the sale’s tax-exempt GO bonds - rated A1 by Moody’s and A by Standard & Poor’s and Fitch Ratings - included a 3.19 percent yield on a 10-year maturity, up four basis points from Monday’s retail order period, and 4.89 percent for a 30-year maturity, down three basis points from Monday.
Yields on top-rated 10-year municipal bonds on Tuesday slipped four basis points from Monday to 2.57 percent, while yields on top-rated 30-year munis also fell four basis points to 4.19 percent, according to Thomson Reuters unit MMD.
In addition to tax-exempt debt, California’s deal included $186.5 million in taxable bonds. Yields on those bonds were 1.09 percent for their November 2016 maturity and 1.657 percent for their November 2017 maturity.
The sale’s proceeds will go to a variety of projects and to refund debt. State Treasurer Bill Lockyer said in a statement that $723 million of the refunding bonds sold would save the state $122 million.
California’s deal was its biggest GO offer since April, when the state sold $2.72 billion of its GO debt in a deal upsized by $668 million in response to strong demand.
California also sold $2.47 billion of its GO debt in March and followed its April GO offer by selling $5.5 billion of revenue anticipation notes in August to raise money for its cash-flow needs. Yields on the notes sold in August were the lowest California had seen in more than 40 years.
After a long history of budget deficits, California is projected to have a surplus in its current fiscal year, the result of belt-tightening, a gradual improvement in the state economy and new revenue from voter-approved tax increases last year.
S&P and Fitch upgraded California this year.