California Bond Sales to Individual Investors Deemed Successful
California’s offering of short-term bonds to individual investors has been deemed an “excellent start” by State Treasurer Bill Lockyer. The Sacramento Bee reported that the State Treasurer sold $1.836 billion to individual investors during October 14, 2008, the opening day of sales. Sales to small investors have thus far raised almost half of the $4 billion the state is seeking to raise during this offering. Tuesday’s bonds were sold in $5,000 increments, with the yield reaching 4.5%, according to the State Treasurer.
Sales to large institutional investors are expected to raise the balance of the planned $4 billion offering. Later in the fiscal year, the state plans to enter the credit markets to raise an additional $3 billion to meet its remaining cash-flow requirements.
Several weeks ago, the Administration expressed concern that, because of the melt down in the private credit markets, California might have to seek cash from the U.S. Treasury to meet its cash flow needs. The Governor had sent a letter to Secretary of the Treasury Henry Paulson outlining the state’s concerns. Fortunately, the private credit markets have opened up since then as evidenced by Massachusetts’ success in raising $750 million for its short-term needs the week of October 6 and October 14’s sales to small investors.
The strong interest from individual investors in California bonds is a welcome signal, as the state prepares to raise the balance of the $4 billion from large financial institutions beginning Thursday, October 16.
—John Gray and Robert Miyashiro