LOS ANGELES — California upsized its $1.6 billion general obligation bond deal to $1.8 billion Wednesday to meet strong investor demand, according to the state treasurer's office.
The state also received its third highest ever total amount of retail orders for a state GO bond sale at $1.1 billion, or 62% of the offering, Tom Dresslar, spokesman for state treasurer Bill Lockyer, said Wednesday.
Retail investors ordered 55.8% of the total offering on Tuesday during the first day of the retail order period. A second retail order period was scheduled for Wednesday, with institutional investor orders originally set for Thursday, but the whole deal priced a day early instead.
The sale included $1 billion of new money to finance a variety of public works projects and $782.9 million of refunding bonds.
The interest savings for taxpayers on the refunded bonds will total an estimated $165 million - for $115 million of net present value, Dresslar reported.
"This is an outstanding result," Lockyer said in a statement after the deal priced. "It shows the market benefits of the State's strengthened fiscal discipline and management."
The deal carried an A1 rating from Moody's Investors Service and A ratings from Standard & Poor's and Fitch Ratings.
"The retail demand exceeded our expectations and reflects investors' growing confidence in California," Lockyer said. "And it's always nice to save taxpayers money on interest."
Bank of America Merrill Lynch and RBC Capital Markets were joint senior managers and Orrick, Herrington & Sutcliffe LLP was bond counsel.
Public Resources Advisory Group was financial advisor.
Yields ranged from 0.07% with a 3% coupon in 2014 to 4.52% with a 4.5% coupon in 2043, according to the final pricing wire released Wednesday.
By comparison, yields on the state's October GO bond sale ranged from 0.15% with a 4% coupon in 2014 to 4.89% with a 5% coupon in 2043.
Dresslar said final yields declined in some maturities from preliminary yields quoted to retail investors on Tuesday. These included a 3.04% yield for a 10-year maturity, down from 3.09%, and 4.52% for a 29-year maturity with a 4.5% coupon, down from 4.58%.
"In another sign of the state's growing market strength, the yield premium investors demand to buy California GOs compared to yields for triple A-rated bonds declined substantially from the October 2013 sale," Dresslar said.
That spread was 21 points for the 5-year maturities on the pricing completed Wednesday and 44 basis points for the 10-year maturities, Dresslar said. In the October 2013 sale, the spread was 28 basis points in the 5-year maturities and 62 basis points in the 10-year maturities.
The Golden State will return to the market later this month with $800 million of lease revenue bonds for the State Public Works Board, and $750 million of revenue bonds for the University of California.
Additionally, California has three bond sales scheduled for April: $400 million more in lease revenue bonds for the SPWB, and $820 million of GO bonds coming in a competitive sale April 22.
