Tags: california | bond | muni

California Sells $1.8B of Bonds; 10-Year Yields 3.7%

Wednesday, 19 Oct 2011 06:56 PM

California sold $1.8 billion in general-obligation bonds, including 10-year securities yielding 3.70 percent, up from 3.51 percent during marketing to individual investors, according to data compiled by Bloomberg.

The yield on $118 million in 10-year bonds is 128 basis points above an index of top-rated debt of the same maturity, a Bloomberg Valuation Index shows. That’s up from a gap of 109 basis points when California sold $2.4 billion of general- obligation debt last month. A basis point is 0.01 percentage point.

The most-populous U.S. state is rated A1 by Moody’s Investors Service, its fifth-highest ranking.

Yields on top-rated 10-year bonds fell for a fourth day to 2.42 percent, after reaching a two-month high of 2.58 percent Oct. 14.

California’s securities are in short supply after Governor Jerry Brown, seeking to curb debt-service costs, imposed a nine- month sales moratorium that cut issuance by more than half from last year. Buyers may also be encouraged by spending cuts that would be triggered if revenue trails projections by at least $1 billion this fiscal year.

About $450 million, the deal’s largest portion, matures in 2041 at a rate of 5 percent. That’s higher than the 4.87 percent yield offered during individual pricing and 133 basis points more than an index of top-rated 30-year state and local debt, according to a BVAL index.

In other sales Wednesday, the Hudson Yards Infrastructure Corp. sold $1 billion of debt to extend the No. 7 subway line to Manhattan’s west side. The deal included $650 million of bonds maturing in 36 years with a yield of 5.1 percent. The bonds are rated A, Standard & Poor’s sixth-highest grade.

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