While tax-exempt prices were crimped, California turned to overseas investors in selling $3.4 billion in taxable debt yesterday, including $2.5 billion of Build America Bonds. International investors put in orders for more than 35 percent of the state’s debt, Treasurer Bill Lockyer said in a statement.
That demand helped drive borrowing costs for California, the lowest-rated U.S. state, down 10 percent since November. The state priced Build Americas to yield 7.481 percent, or 2.7 percentage points above Treasuries. Bonds maturing in 2036 were priced to yield 3.15 percentage points above Treasuries. Citigroup Inc. and Bank of America Merrill Lynch led underwriters in the deal.
Citigroup marketed the sale to 29 countries over eight weeks amid “unprecedented global demand for a BABs offering,” said Alexander Samuelson, a spokesman for Citigroup.
“We have a lot of foreign investors looking at California debt as a place where other investors are scared off, perhaps irrationally,” said Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott LLC in Philadelphia.
*On a seasonally adjusted basis, the CPI was unchanged in February after increasing 0.2 percent in January. The index for all items less food and energy rose 0.1 percent in February after falling 0.1 percent in January.