WASHINGTON Feb 8 The state of California will
likely sell $7 billion of general obligation bonds this year in
two parts, with the first half of the sale in a few months,
Treasurer Bill Lockyer told Reuters TV on Friday.
"It's probably two or three billion," Lockyer said of the
spring issuance. "We're still working with the spending agencies
in the department of finance to determine their specific needs
for capital cash this spring."
California will return to the market in the fall, he added.
Last week, Standard & Poor's upgraded the state to A with a
stable outlook, from A-minus with a positive outlook. Earlier
this week, Moody's Investors Service said Governor Jerry Brown's
proposed budget reflected a "significant improvement" in
California's finances, but it decided to hold the state's credit
rating at A1 with a stable outlook.
The ratings moves will likely allow California to keep
borrowing costs low, Lockyer said.
"On the investor side we're finding very helpful movement in
the market for us as the demand has improved - the ratings of
course have helped probably with that," said Lockyer. "We've
always had fairly substantial retail interest independent of the
large institutional investors."
The $3.7 trillion U.S. municipal bond market, which has
widely anticipated the S&P upgrade, pushed yields on
California's bond lower on Thursday. California's 10-year
general obligation bonds yielded 0.29 percent more than
top-rated municipal debt, compared with 0.37 percent on
Wednesday and the nearly 2 percent more they offered in 2009.
Prior to the S&P upgrade, California had the third widest
1-year yield spread after Puerto Rico and Illinois among main
muni debt issuers monitored by Municipal Market Data. After the
upgrade, California had the ninth-highest 10-year yield spread
at about 29 basis points over triple-A rated municipal bonds.