SAN FRANCISCO — California has confirmed the state is set to sell $10 billion of revenue anticipation notes during the week of Aug. 13.
The deal is scheduled for Aug. 14 and Aug. 15 for retail orders and Aug. 16 for institutional orders and pricing, although things could change, according to Treasurer Bill Lockyer's spokesman Tom Dresslar.
The state had been expected to sell around $10 million of the Rans to help even out its cash flow since Gov. Jerry Brown released his proposed budget in January.
In June, Treasurer Bill Lockyer's office said the deal would be in August and JPMorgan and Wells Fargo had been hired to jointly manage the deal, while De La Rosa & Co would serve as co-senior manager.
Standard & Poor's said in a report Wednesday it has assigned an SP-1-plus rating to the note sale.
The ratings agency said the rating reflects its belief the state will retire the Rans when they mature in June 2013 with one series potentially maturing in May 2013.
Lockyer's most recent note sale happened in February when the state sold $1 billion of privately-placed debt as part of a plan to shore up cash flow after California Controller John Chiang warned that California would run out of cash unless it adopted $3.3 billion of short-term measures.
But in recent years the state has been forced to take out bridge loans ahead of the typical Ran sales because of state and national politics.
Last year, Lockyer took out a $5.4 billion bridge loan in July from a group of eight banks in an effort to avoid potential market chaos caused by Congress' wrangling over the debt ceiling. The loan let the state postpone its regular Ran sale until September, when it sold notes of the same amount.
In 2010, Lockyer received a bridge loan of $6.7 billion to give the state time to prepare a Ran sale after the state budget was adopted 100 days late. The treasurer sold $10 billion of notes in the public markets that November to help repay the Rans.
And in 2009, California faced a cash crunch because of another late budget, which forced Chiang to issue IOUs instead of the usual annual note sale.
Cash flow problems associated with late budgets appear to have been moderated by Proposition 25, which passed in 2010 and has since forced lawmakers to pass a budget on time or else forgo pay. It also lowered the threshold for passing a budget to a majority of votes from a super majority.