SAN FRANCISCO — California has set Sept. 20 as the date for its first general obligation bond sale of the year and has put another on the calendar, although the size of both deals remains undecided.

California, typically the largest issuer in the country, has refrained from issuing any GO debt so far this year, bypassing its usual multibillion dollar spring sale as it revaluated financing needs in the face of a $9.6 billion budget deficit.

The lack of issuance by the state has helped drive yields to record lows in the municipal market, making it much more attractive for large deals.

The market should find some relief now that the state treasurer's office has slated the next GO sale. The deal will come just a week after the state is scheduled to sell $5.4 billion of revenue anticipation notes to pay off a cash-flow bridge loan.

The second GO deal is listed on treasurer's tentative calendar after a water revenue bond sale by the Department of Water Resources on Oct. 6.

"What we do in the fall will depend mainly on priorities set by the Department of Finance, and how much business they want to do to keep current projects going and start new ones," said Tom Dresslar, a spokesman for California Treasurer Bill Lockyer.

Working under a mandate by Gov. Jerry Brown to reduce the state's "wall of debt," the Finance Department has been polling departments and agencies to find how much cash from previous bond proceeds they have on hand to spend on projects rather than issue new debt.

More than $11 billion of cash from bond sales have accumulated in department accounts, costing taxpayers more than $700 million a year in debt service for projects that have yet to be completed, according to the governor's May Revise budget.

"We had a moratorium on the spring bond sale because we found from polling different agencies that they had significantly high cash balances on hand that weren't being used," said H.D. Palmer, a spokesman for the Department of Finance. "We want to put those dollars to work."

Palmer said the administration would rather help the state departments and agencies better manage their cash rather than incur new debt and drive up debt service costs.

Finance officials are still working with the departments and agencies to determine out how much GO debt may need to be sold this fall, according to Palmer.

The municipal market has been marked this year by slack issuance as many states and local governments have struggled with tight budgets and high deficits.

California issued no GO debt so far this year after offering $6 billion during last year's first half, according to data from Thomson Reuters. The state government issued $10.5 billion of debt in 2010, and that number was down substantially from 2009 when it set a municipal market record of $23 billion.

California did not sell new-money GOs this past spring for the first time since at least 1988.

Alexander Anderson, a portfolio manager for Envision Capital Management in Los Angeles, said any California GO sale should be well-received from the institutional side, even with yields at record lows.

"When there is a lack of issuances, there are more participants in each deal," Anderson said. "What we are seeing with a lot of the new issuances is that institutional buyers have to be invested. They are buying up all the new issuances no matter how low the yields might be."

On Monday, the 10-year municipal yield held at 2.15%, the lowest closing level ever recorded by Municipal Market Data. The two-year muni yield stayed at 0.30%, its lowest yield in more than 40 years, while the 30-year yield ticked up one basis point to 3.80%.

The treasurer's office has also already selected the managers for each GO sale. The state picked Bank of America Merrill Lynch and Stone & Youngberg LLC as joint senior managers for the September GO deal. Goldman Sachs & Co. and JPMorgan have been chosen as joint lead managers for the second GO offering.

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