ALAMEDA, Calif. — California has closed a $6.7 billion bridge loan with six financial institutions to help the state through a cash crunch, Treasurer Bill Lockyer announced Tuesday afternoon.
The privately placed interim revenue anticipation notes mature in January, with a 1.4% annualized interest rate, according to treasurer’s office spokesman Joe DeAnda.
The proceeds will serve as a bridge loan for the state’s depleted coffers until the treasurer’s office can prepare the necessary documentation and marketing for a public Ran sale. Pricing for the issue, which is expected to be in the $10 billion range, is tentatively scheduled for the week of Nov. 15.
California customarily sells short-term notes in the fall to deal with built-in irregularities in its cash flow. A disproportionate share of state tax revenue arrives in the spring, near the end of its fiscal year.
The task was more complicated this year because California set a new record for tardiness by adopting its budget Oct. 8 — 100 days after the start of its fiscal year.
The institutions buying the interim notes are JPMorgan, $3.125 billion; Goldman Sachs, $1.5 billion; Wells Fargo, $1 billion; Citi, $500 million; Morgan Stanley, $325 million; and the Sacramento-based Golden 1 Credit Union, $250 million.
The state selected the six institutions from 10 bids it received for a total of $13 billion, DeAnda said.
“This sale is the first step to getting the state back on its regular payment schedule and helps ensure that vital public services continue to operate uninterrupted,” Lockyer said in a statement. “The number and volume of bids demonstrates that the financial community continues to have confidence in California, and as we work to complete the state’s cash-flow borrowing for this fiscal year, we will continue to negotiate the best deal possible for taxpayers.”