SAN FRANCISCO - California upsized the green bond component of its general obligation bond sale this week after meeting strong demand from investors.
The state priced the $2.37 billion deal Tuesday after a two-day retail order period.
The deal included the state's first ever issuance of green bonds, sold exclusively to fund projects that benefit the environment.
"California's first green bond sale produced an outstanding result, generating such a strong demand that we expanded the sale by $100 million," State Treasurer Bill Lockyer said in a statement. "We are proving that there's a ready and enthusiastic market for California bonds used exclusively for financing projects that improve and protect the environment."
The state sold $300 million of green bonds, $1.08 billion of additional new money GO bonds for infrastructure projects, and $988 million of refunding bonds.
Retail investors placed orders for about $813 million, or about 34.3% of the total offering, according to the treasurer's office.
Final yields included 1.28% with a 5% coupon for five-year maturities, and 2.48% with a 5% coupon for 10-year maturities.
Bonds maturing in 2044 priced at 3.49% with a 5% coupon. The spread between the yield on the state's 30-year bond and the yield on the Municipal Market Data index for a 30-year triple-A bond was 36 basis points.
"This was the state's lowest credit spread on 30-year bonds since June 2007," according the treasurer's office. "Combined with low general market interest rates, today's sale achieved the lowest absolute borrowing cost on 30-year bonds since at least 2001."
The green bonds priced at 2.9% with a 5% coupon in 2028, and 3.37% with a 5% coupon in 2037.
Wells Fargo and Citi were joint senior managers on the deal, with Bank of America Merrill Lynch as joint senior manager for the green bonds.
California's GOs are rated Aa3 by Moody's Investors Service, and A1 by both Standard & Poor's and Fitch Ratings. Standard & Poor's assigns a positive outlook, while the other two credit rating agencies give stable outlooks.
