California’s Assembly passed limits on long-term bonds that have saddled school districts with debt of as much as 10 times the principal after financing new classrooms in years of slumping property values.
California was forced to raise yields on some longer bond maturities to complete a $2.1 billion general-obligation sale, the state’s first debt offering since Standard & Poor’s boosted its credit-rating in January.
California took orders from individual investors for almost a third of $2.2 billion of general-obligation bonds in the first day they were offered, with a preliminary yield of 2.54 percent on 10-year securities, the treasurer’s office said.
Morgan Stanley and Citigroup Inc., criticized by California for arranging investment bets against state bonds, pitched Treasurer Bill Lockyer on ideas for legislation to sell $25 “minibonds” to expand sales to individuals, records from his office show.
Only eight months ago, Bill Lockyer was the envy of California politicians. Undefeated in 39 years as assemblyman, senate leader, attorney general and treasurer, the Democrat won 5.4 million votes in his 2010 re-election, more than any other state official in the U.S.