After selling a whopping $3.2 billion of bonds to retail investors in less than two days of the retail order period, California yesterday afternoon accelerated the institutional pricing and increased the size of its general obligation deal to $6.5 billion from the original $4 billion. The bonds were priced for institutions one day early to meet overwhelming demand amid the backdrop of a largely unchanged municipal market.

California's $6.5 billion deal -priced by co-senior managers Citi and Merrill Lynch & Co. - marks the largest new issue to enter the market since Ohio's Buckeye Tobacco Settlement Financing Authority sold $5.53 billlion in 2007. California has been out of the market since June; its budget and cash-flow crises created a backlog of projects requiring financing. The deal matures from 2013 through 2029, with term bonds in 2033, 2036, and 2038.

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