Los Angeles: California plans to sell as much as $2 billion (Dh7.3 billion) of tax-exempt general obligation bonds in early March, the first sale by the largest US issuer of municipal debt in three months.
JPMorgan Chase & Co. and Morgan Stanley will manage the sale, according to Treasurer Bill Lockyer's website. The issue, listed on Friday on his bond sales calendar, is the first since the state had its credit rating cut one level to A by Standard & Poor's in January.
California, the world's eighth-largest economy, faces a $20 billion hole in the budget during the next 16 months. Lawmakers are working on a plan to trim a quarter off that deficit and shore up the state's cash purse. In January, Lockyer's chief deputy, Steve Coony, said the state can't sell more debt until the Legislature took those steps.
The extra yield investors are demanding on the state's 10-year bonds above AAA-rated municipal securities rose to 1.38 percentage points on Thursday, its highest since December 30, according to Bloomberg fair value index data.
Lockyer's press secretary, Tom Dresslar, didn't immediately return a telephone call and an email seeking comment.
