SAN FRANCISCO - Fresno, Calif., next week plans to sell $161.2 million of subordinate sewer revenue bonds, including a $74 million refunding that will get it out of the variable-rate bond market for now.

California's sixth-largest city needs to refund its variable-rate demand obligations because interest rates on the Financial Guaranty Insurance Co.-backed debt spiked to as much as 11% from around 3.5% after the insurer was downgraded by the three major credit agencies. More than 95% of the debt has since been put back to the letter-of-credit provider, State Street Bank & TrustCo., triggering penalty rates in the 6% to 7% range.

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