Ravenous investor demand allowed California to boost the size of its sale of infrastructure bonds Tuesday to $6.54 billion from a planned $4 billion, and to close out the deal a day early.
The offering, the state's first sale of longer-term bonds since June, didn't come cheap for taxpayers: The longest-term bond, maturing in 2038, will pay investors an annualized tax-free yield of 6.1%.
By contrast, California paid a yield of 5.3% on bonds of that maturity in the June sale.
The deal allowed Treasurer Bill Lockyer to reduce to $61 billion the state's backlog of voter-approved bonds to be sold, and to provide funds for building projects stalled by months of budget wrangling in Sacramento.
"Investors stepped up and showed their confidence in California," Lockyer said.
They also showed that, with federal income tax rates expected to rise for the well-heeled, high tax-free yields are hard to resist -- even though California has the lowest credit rating among the 50 states.