Oct. 8 (Bloomberg) -- California wants to sell $4 billion of short-term notes next week to avert a potential cash shortage, seeking demand from individual investors, as states struggle to obtain financing, State Treasurer Bill Lockyer said.

``The credit markets are so impossibly frozen at this moment, we are still a little nervous about that,'' Lockyer said in a Bloomberg Television interview today. ``We're hoping in this state with the pool of investors that we have here that we can convince a lot of people to purchase these individually.''

Bank of America Corp. and Goldman Sachs Group Inc. will lead a group of investment banks planning to underwrite the deal next week. The state may sell as much as $7 billion in notes if demand allows, or offer the remainder needed to boost cash flow later in the year, according to preliminary bond documents.

To contact the reporter on this story: Jeremy R. Cooke in New York at jcooke8@bloomberg.net.

Last Updated: October 8, 2008 13:46 EDT