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Aug. 15 (Bloomberg) -- Individual investors ordered $3.24 billion of $10 billion in notes offered by California with yields of as much as 0.55 percent, according to Treasurer Bill Lockyer’s office.

Individuals bought about 40 percent of the $8 billion in securities offered to them in the state’s largest short-term borrowing in two years, according to an e-mailed statement from Lockyer’s office.

In September, individual investors purchased 66 percent of a $5.4 billion offering at yields of 0.38 percent to 0.4 percent. Lockyer ended that sale after two days, a day earlier than planned.

Last year’s sale probably went more briskly because it was smaller, said Michael E. Johnson, a managing director at Gurtin Fixed Income Management LLC. The Solana Beach, California, firm manages about $6.1 billion, including $4 billion in municipals.

“When you look at the pricing, it looks fair to us,” Johnson said by telephone. “Given the size of it, they may need to add 10-ish basis points to get it done.”

Final prices will be set tomorrow after institutional investors, such as pensions and insurers, place their orders, according to the e-mail from Lockyer spokesman Tom Dresslar.

‘Very Satisfied’

“We’re very satisfied with the retail results,” Dresslar said. “Now we have to complete the job at the best possible price for taxpayers.”

The revenue-anticipation notes offered yields ranging from 0.3 percent to 0.4 percent for those coming due in May and 0.4 percent to 0.55 percent for a June maturity, according to a pricing memo e-mailed by Dresslar. The range is almost 12 basis points to about 37 basis points higher than yesterday’s 0.18 percent yield on benchmark AAA one-year tax-exempt debt, according to data compiled by Bloomberg. A basis point is 0.01 percentage point.

Borrowing costs for the most populous U.S. state have declined as Governor Jerry Brown, a Democrat, has taken steps to curb borrowing and reduce the state’s reliance on fiscal maneuvers such as internal loans and delaying payments owed to schools and local governments. Both Standard & Poor’s and Moody’s Investors Service gave the notes top ratings.

With the note sale and borrowing planned through October, California will issue $17.48 billion in debt this year, up from $11.18 billion in 2011, according to calculations by Dresslar. In 2010, when the Build America Bonds program ended, California sold $21.12 billion in debt. The numbers include general-obligation bonds, revenue-anticipation notes and lease-revenue bonds issued by the state Public Works Board.

Additional Sales

The state plans to sell $1.6 billion in general-obligation bonds on Sept. 25, including $1.3 billion for infrastructure projects and $300 million to refinance existing bonds, according to the treasurer’s office.

The state also plans a $500 million sale Oct. 23 to refinance general-obligation bonds.

The Public Works Board scheduled a $250 million sale of lease-revenue bonds Sept. 13 for the University of California and California State University systems, and $548 million on Oct. 17 for various projects, according to Dresslar.

State and local governments typically sell short-term debt to raise cash until the bulk of tax receipts arrive later in the fiscal year, which in California ends June 30. The notes must be repaid in the fiscal year they are sold.

JPMorgan, Wells

JPMorgan Chase & Co. and Wells Fargo & Co. are joint senior managers and Los Angeles-based bond firm De La Rosa & Co. is co-managing the sale. The state will complete the offering with institutional sales tomorrow.

Following the September sale, California, the most indebted state, had to borrow $1 billion more in February after tax collections fell short and spending topped expectations.

In the September sale, two-thirds of the debt was sold to individual investors. A portion that matured in May was priced at 0.38 percent, while the bulk of the bonds, which came due in June, were offered at 0.4 percent.

Those yields at the time were about 17 basis points higher than yields on AAA rated tax-exempt debt maturing in a year, according to data compiled by Bloomberg.

To contact the reporters on this story: James Nash in Los Angeles at Michael B. Marois in Sacramento at;

To contact the editor responsible for this story: Stephen Merelman at

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