California sold $441 million in general obligation bonds on Wednesday at the lowest yields in 12 years. But while the deal was described as a virtual sellout, investors demanded higher yields on some of the bonds than on similar issues sold Wednesday by Georgia.
Analysts said the difference between the two states' bond yields showed that investors have grown a bit warier of California's credit-worthiness, in the wake of the state's deep recession.
Both California and Georgia are rated "AAA," the highest possible ranking, by independent rating agencies. But the 10-year notes that California sold Wednesday pay a yield of 5.80%. In contrast, Georgia's new 10-year notes pay a yield of 5.75%.
California's $441-million offering encompassed bonds maturing in from one to 20 years. The longest-term bonds, maturing in 2011, were priced to yield 6.4%.
Tom Opdycke, managing director of BankAmerica's public finance arm, which underwrote the bond sale, said investor demand was "excellent" despite concerns about the state's fiscal health.
State Treasurer Kathleen Brown said the bond proceeds will be used to finance such projects as school facilities, clean air and water programs and homeless programs.