California priced $5.5 billion of revenue anticipation notes on Thursday, securing the lowest interest rates in more than four decades.
The $1.5 billion of RANs maturing on May 28, 2014 priced at 0.21% with a 2% coupon. The $4 billion of RANs maturing on June 2, 2014 priced at 0.23% with a 2% coupon. The notes are rated MIG 1 by Moody's Investors Service, F1 by Fitch Ratings and SP-1-plus by Standard & Poor's.
The state priced the deal for institutional investors on Thursday, following a retail order period Wednesday.
Those are the lowest yields in a regular RAN sale since at least 1971, the earliest year the data are available, according to the state treasurer's office.
When the state sold $10 billion of RANs last year, the yields were 0.33% for the May 2013 maturity and 0.43% for the June 2013 maturity.
"We received excellent demand for the RANs and an outstanding price for taxpayers," State Treasurer Bill Lockyer said in a statement. "The results add to the accumulating evidence of growing investor confidence in California's fiscal management."
This year's RANs sale was about half the size of last year's, which reflects the state's improved cash position, Lockyer said. The state annually sells RANs to cover its cash-flow needs for the fiscal year.
Retail investors ordered $1.64 billion and institutional investors placed $8.6 billion of orders, with the bulk of the priority institutional orders coming from money market funds, according to the treasurer's office.
JPMorgan and Morgan Stanley were joint senior managers and De La Rosa & Co. was co-senior manager, leading a syndicate of 33 other firms.