California's taxable treat

The 2017 top municipal bond issuer is bringing yet another two-billion dollar deal to market, this time around however California will be selling taxable bonds. The new tax legislation leaves the Golden State few options to refinance the 2009 bonds, but the taxable route should have the way for buyers overseas.

VOICEOVER: One of the top muni issuers is coming back to market, bringing another $2 billion deal.

The Golden State is set to offer $2.15 billion of various purpose taxable GO bonds on Tuesday. The transaction will be mostly refunding bonds, so the state can refinance old debt and provide funding for 2,600 projects including high-speed rail, stem cell research and affordable housing.

“The elimination of advance refundings on tax exempt bonds, in December’s tax overhaul leaves the state few options for refinancing the 2009 bonds, outside of selling them as taxables”, said California’s deputy treasurer for public finance.

The largest deal of the week and biggest taxable muni deal since 2010 shouldn’t have a lack of investors, regardless of whether they are taxable or tax exempt.