All-Time Record Low Interest Rate on State Bond Sale

California completed a $1.75 billion sale of general obligation bonds September 24 with the state paying an all-time low interest rate of 3.72 percent on 30-year bonds, according to the state Treasurer’s Office.

Retail investors ordered 58.3 percent of the offering. 

Of the bonds sold, $1 billion raise new money for various types of public works projects while $750 million refinances existing debt at a lower interest rate.  The total savings to taxpayers over the life of those bonds will be $157 million.

“This is an outstanding outcome for taxpayers.  Our bonds’ market performance continues to rebut those who can’t seem to break the habit of trying to paint the darkest picture of California’s financial condition,” said Treasurer Bill Lockyer. “This result shows investors know better and that they recognize we have greatly improved our fiscal management.” 

The strong retail demand led the state to increase the deal by $200 million — the refunding component was originally $550 million — and move up the completion date from September 25.

Across the board, the yields are significantly lower than the rates the state paid in April in its $1.35 billion general obligation bond sale.  So are the spreads between California’s yields and yields on AAA-rated bonds in the Municipal Market Data index. 

Key yields included: 1.15 percent for the 5-year maturity; 2.45 percent for the 10-year maturity; and 3.72 percent for the 30-year maturity.

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