SAN FRANCISCO — California Treasurer Bill Lockyer announced Monday that the state will go to market with its first general obligation bond issue this year on March 1 with around $2 billion of refunding GOs.
The treasurer has also set a sale of Department of Water Resources revenue bonds for Feb. 28, a public works lease revenue bond sale for mid-March and another GO deal for mid-April.
Tom Dresslar, a spokesman for Lockyer, said proceeds from the first GO sale would be used to refund previously sold bonds.
He said the deal, the state’s first spring issuance in two years, will include a two-day retail order period.
The spring bond sales will come shortly after a supplemental revenue anticipation note deal of as much as $1 billion. It is tentatively set for Feb. 22 as a private placement to financial firms.
The Rans are part of a plan that also includes payment deferrals and internal borrowing to help handle a cash crunch.
Controller John Chiang warned lawmakers earlier this month that the state would run out of cash starting at the end of the month unless it adopted $3.3 billion of short-term measures to tackle the problem.
Moody’s Investors Service has warned that cash shortage is a credit negative for the state.
California is still one of the lowest-rated states in the union, according to Standard & Poor’s and Fitch Ratings, both of which assign A-minus ratings. The state carries a more positive A1 rating, two notches higher, from Moody’s.
The state also expects to sell its usual Ran deal in the fall to deal with unbalanced tax collections that are heavily weighted toward the second half of the year.
In September, the state issued $2.39 billion of GO bonds, with yields of 1.61% on five-year maturities, 3.17% on 10-year bonds and 4.80% on bonds maturing in 30 years.
Because of its low ratings and its common name in the market, California provides some yield to investors in a market hovering around all-time lows.
The state’s 10-year bond sold 105 basis points over the Municipal Market Data triple-A index near the end of September. On Monday, its 10-year bond sold 71 basis points over the same index.
Lockyer also announced Barclays Capital, JPMorgan and Wells Fargo Bank would be joint senior managers on the March sale. Goldman, Sachs & Co. and Siebert Brandford Shank & Co. would lead the lease revenue bond sale in mid-March.
Citi, Bank of America Merrill Lynch and Morgan Stanley would jointly manage the April sale.
KNN Public Finance, Montague DeRose and Associates and Public Resources Advisory Group have been appointed financial advisors for the deals.
Orrick, Herrington & Sutcliffe LLP will be bond counsel for the GOs while Stradling, Yocca, Carlson & Rauth will handle the public works deal.
