SAN FRANCISCO, Oct 21 (Reuters) - Moderate demand marked California’s retail-order period on Monday for its sale of $2.2 billion of general obligation bonds, some yielding 4.92 percent on their 30-year maturity, or 70 basis points above Friday’s yield on 30-year AAA-rated muni debt.
Yields on $707.7 million of various-purpose GO bonds the state offered ranged from 1.48 percent on their November 2018 maturity to 4.92 percent on their November 2043 maturity.
Yields on $659.5 million refunding bonds ranged from 1.48 percent on their November 2018 maturity to 4.60 percent on their November 2032 maturity.
Pricing for $246.0 million of GO bonds slated for school facilities was not immediately available.
JP Morgan Securities LLC is the lead manager for the three deals.
Additionally, a $450.0 million mandatory put deal led by Citigroup Global Markets Inc carried a 0.92 percent yield on its December 2016 put date and a 1.33 percent yield on its put date in December 2017.
In all, the most populous U.S. state will offer $2 billion of tax-exempt debt. Also, California will price $186 million of taxable GO bonds on Tuesday, when its sale is opened to institutions. Citigroup will lead the taxable deal.
Retail orders for the state’s debt were moderate, which opens the door to strong demand on Tuesday from institutions, said Billy Schmohl, vice president broker-manager Alamo Capital in Walnut Creek, a co-manager of the sales.
“They’ve been pretty vocal about it,” Schmohl said. “Institutions will take everything we can give them.”
California’s GO bonds are rated A by Standard & Poor’s and Fitch Ratings and A1 by Moody’s.
S&P and Fitch upgraded the state this year as its finances strengthened. The state budget is forecast to swing to a surplus after several years of deficits thanks to the economic recovery, spending cuts in recent years, spending restraint and new revenue from voter-approved tax hikes last year.
California’s deal this week is the state’s 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. The state also sold $2.47 billion of its GO debt in March.
California followed its April GO offer with the sale in August of $5.5 billion of revenue anticipation notes to raise money for its cash-flow needs, about half the size of the state’s note sale last year. Yields on the notes sold in August were the lowest California had seen in more than 40 years.
In a report earlier this month, Lockyer’s office said California plans to sell $7.3 billion of its GO debt this fiscal year and $5.2 billion of the bonds in next fiscal year.
The first day of California’s latest GO sale came on the heels of a report last week by the state’s finance department that said the state’s revenue for September came in $392 million above projection in the state’s budget, putting it $136 million above forecast for the current fiscal year that began in July.