SAN FRANCISCO (Reuters) - California will give individual investors the first opportunity to place orders next week during a $250 million sale of state debt to fund stem-cell research, the state treasurer said on Thursday.
The general obligation bond sale will be the first of its kind to raise money for the California Institute for Regenerative Medicine, which funds research into the use of stem cells -- including cells from human embryos -- for medical treatments.
Stem cells from human embryos may help find cures for many medical conditions and diseases, according to many scientists, but their use is controversial. The Bush administration opposes using cells from destroyed embryos and has limited federal involvement in research using them.
There are no federal restrictions on state- or privately funded research efforts like California‘s, which voters approved in 2004 through a ballot measure authorizing the creation of the institute and its bonding authority. The institute may issue up to $3 billion in debt over 10 years.
State Treasurer Bill Lockyer said he expects individual investors in California will also endorse next week’s offer with early orders to take part in a long-awaited debt sale, perhaps the first of many by the state to raise cash for stem-cell research.
“There probably is a large group of people in California who are philosophically committed to this,” Lockyer said in a telephone interview.
“We contemplate going back to markets fairly regularly for these,” Lockyer added.
Individual investors may place orders for the debt on October 3, the day before the bond sale opens to all investors, including institutional investors.
Of the $250 million issuance, $200 million will fund stem cell research and roughly $45 million will cover the cost of issuing the debt and retiring bond anticipation notes sold while the stem-cell measure was being contested in court.
Individuals placing early orders will receive the same price for the bonds as large buyers and will not have to pay an upfront sales commission.
The minimum order for individual investors is $5,000. Interest earned on the bonds will be subject to federal income tax but not state income tax.
The sale will follow California’s June sale of $2.5 billion in tax-exempt state general obligation debt that Lockyer opened first to individual investors. They bought about $690 million of the debt, exceeding his expectations.