Oct. 23 (Bloomberg) -- California sold $539.3 million of general-obligation bonds today in its largest tax-exempt competitive issue since 2007.
The winning bidder, JPMorgan Chase & Co., offered a yield of 2.14 percent on a 10-year maturity, Tom Dresslar, a spokesman for Treasurer Bill Lockyer, said in a statement. The deal, replacing previous debt, will lower interest payments for the most populous state by about $118 million, he said.
The 10-year rate is 0.44 percentage point more than a benchmark index of munis, data compiled by Bloomberg show. The so-called yield spread shrank from 0.68 percentage point when the state issued 10-year bonds on Sept. 24 in a negotiated deal, and is the slimmest for the state’s bonds in four years, the data show.
“We’re pleased with the results,” Dresslar said in an e-mailed response to a question about the state’s strategy. “We always make decisions on whether to go competitive or negotiated based on what works best for taxpayers. That will continue to be our practice.”
The yields are 1.07 percent for the five-year maturity and about 3.53 percent for a 20-year maturity, Dresslar said.
Today’s sale was California’s largest competitive general-obligation issue since February 2007, when it offered $1.1 billion in tax exempts and $625 million in taxable bonds.
JPMorgan submitted the winning bid at a true interest cost of 3.22 percent for a 20-year security, Dresslar said. The true interest cost represents the total cash amount of the interest payments and the time of the interest and principal payments.
The losing bids were Wells Fargo Bank National Association, 3.24 percent; Morgan Stanley & Co., 3.280 percent; Bank of America Merrill Lynch, 3.285 percent; Goldman Sachs & Co., 3.31 percent; Barclays Capital Inc., 3.34 percent; RBC Capital Markets LLC, 3.36 percent, and Citigroup Global Markets Inc., 3.39 percent.
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