California Reports $195M in Refunding Savings

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John Chiang, controller for the state of California, stands for a photograph after an interview in San Francisco, California, U.S., on Tuesday, May 29, 2012. California, the most indebted state, may need to borrow more than $10 billion in short-term securities to have enough cash on hand to pay bills through the fiscal year that begins in July, Chiang said. Photographer: David Paul Morris/Bloomberg *** Local Caption *** John Chiang

LOS ANGELES — California reported that it achieved $195 million in net present value savings on $1.5 billion in tax-exempt and taxable general obligation bonds it priced Tuesday in three separate competitive offerings.

State officials said it was the largest competitive sale of long-term municipal bonds issued in the United States in a single day in more than 25 years.

The sale was comprised of $1.23 billion of tax-exempt bonds and $237 million of taxable bonds that were bid out competitively in three separate groups – California officials view it as one sale.

Pennsylvania sold $1 billion in a single-tranche competitive sale in February 2015.

"The market's clamor for California bonds provides solid evidence that the market is eager to invest in our state," Treasurer John Chiang said in a prepared statement. "Our government is on sound footing after weathering the worst recession in more than half a century."

A large portion of the sale, $998.5 million refunded existing, higher-interest debt.

The refunding will save taxpayers approximately $250 million in interest costs over the remaining life of the bonds. The savings, when calculated on a net present value basis, is approximately $195 million.

The new money raised by the bond sale will pay for highway safety projects, safe drinking water supplies and housing and emergency shelter programs.

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