SAN FRANCISCO - California Treasurer Bill Lockyer Friday announced the closing of the state's first private placement of general obligation bonds with another public entity.

More private placements are in the works, he added, even though the state now has a budget in place that should make it possible for California to resume issuing in the public markets.

The state closed a $194 million transaction with the Bay Area Toll Authority, which made the deal in order to keep funds flowing for 11 road projects despite a freeze on most state bond-financed infrastructure spending.

That freeze has not yet thawed, despite the adoption in February of a state budget plan to stem a $40 billion-plus deficit.

"We're working hard to get California's infrastructure program back in high gear, but it will take time," Lockyer said in a statement. "Meanwhile, we need to pursue innovate financing strategies to keep projects moving, people working, and businesses thriving. This deal is the first of its kind, but it won't be the last."

California will pay BATA 3.34% interest over 18 months, at which point it plans to buy back the bonds and resell them into the public market at long-term maturities.

Because of the state budget crisis, financing for thousands of bond-financed infrastructure projects was suspended in December to conserve the resources of the state's Pooled Money Investment Account, which provides interim financing for projects before bonds are issued. California hasn't issued GO bonds since June.

The state's financial experts are still reviewing the cash-flow projections of the recently enacted budget to determine when to end the infrastructure financing freeze.

Until they are finished, the state won't schedule a GO bond sale. However, with the budget complete, it is moving forward with plans to sell about $1.6 billion in debt in the next two weeks for the California State University, the University of California, and the California Department of Water Resources, as those credits aren't directly linked to the state general fund.

Lockyer said the treasurer's office is continuing to review a transaction similar to BATA's with the Los Angeles County Metropolitan Transportation Authority, and is exploring the possibility of private placements with foundations and other investors interested in funding stem cell research, environmental protection, and other projects.

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