California plans to offer $12.5 billion in debt in the next 18 months after the most-populous state’s economic recovery helped reduce its relative borrowing costs to the lowest level in five years, Treasurer Bill Lockyer said.

The sales will include $5 billion to $6 billion in general obligations through early next year, another $5 billion of such debt after July 1 and $2 billion in lease-revenue securities, Lockyer said at a Bond Buyer conference in Los Angeles.

“Whenever we go to market, the demand exceeds the supply,” Lockyer said in an interview. “Retail continues to be substantial,” he said, referring to individual investors.

Fitch Ratings and Standard & Poor’s raised California’s credit rating in the past year, citing an economic recovery that has lifted the state’s housing industry. Both companies rate the state A, their sixth-highest grade.

California sold $7.6 billion of long-term general obligation bonds in the fiscal year that ended June 30, according to data compiled by Bloomberg. The state issued $764 million of long-term general obligations so far in the fiscal year that began July 1.

The state has bond sales scheduled for October and November, though Lockyer hasn’t said how much he would offer.

Buoyed by voter approval last year for increases in sales taxes and higher levies on incomes of $250,000 or more, Governor Jerry Brown, 75, forecasted an $817 million surplus this year. It would be the first time revenue exceeded expenditures in almost a decade, after the world’s ninth-biggest economy ran up more than $100 billion of deficits since 2007.

As of Sept. 1, California had $79.4 billion in long-term bonds, out of $147.8 billion authorized by voters, according to Lockyer’s website.