Featured Municipal Bond Issue, Week of 10/16/2017: State of California Bonds – General Obligation Bonds – $1.6 Billion 

This week’s featured bond comes from the State of California. The State of California is issuing general obligation bonds in the amount of $1.6 billion the week of October 16, 2017. These California bonds are being issued in three competitive series. The first series are $509 million in federally-taxable various purpose bonds, the second series is $199 million in tax-exempt various purpose bonds, and the third series is $881 million in tax-exempt refunding bonds.

Proceeds of the taxable bonds will be used to fund projects under the Safe, Reliable High-Speed Passenger Train Bond Act for the 21st Century and pay certain of the State’s outstanding taxable general obligation commercial paper notes that were previously issued to fund certain projects. The tax-exempt bonds are construction bonds that will be used to pay certain outstanding previously issued tax-exempt commercial paper notes, and the refunding bonds will be used to refund certain outstanding general obligation bonds for debt service savings.

Security for the bonds is a general pledge of the full faith and credit of the State of California. The only provision of the State Constitution that creates a higher priority for any State fiscal obligation is provision directing that from all State revenues there will first be set apart funds for the support of the public school system and public institutions of higher education. Further details on the purposes, tax-status, and security, as well as other matters pertaining to these California general obligation bonds can be found in the preliminary official statement, provided by MuniOS.

As of August 2017, the State of California has an unemployment rate of 5.4%, which is 1.0% higher than the national rate for August, and 0.2% lower than at the same time in 2016. The chart below (click to expand) shows the changes in the State of California and U.S. unemployment rates for the past ten years. MuniNet provides this data and more, easily accessible, for all 50 states and each Metropolitan Statistical Area in the country, in our Employment Database.california bonds

Provided at left (click to expand) is a quick snapshot of financial characteristics of State of California as of 6/30/2016, compared with the medians for other U.S. States for 2015-2016, courtesy of Merritt Research Services, LLC. Merritt has many of the sector medians publicly available and regularly updated on their Benchmark Central page. (Merritt believes the data to be reliable but does not make any representations as to its accuracy or completeness)In addition to the Merritt information related to the featured bond, more information can be found on our municipal bond calendar, city, state, and county pages, and our employment database.

These facts and numbers are for informational purposes, and should not be considered an official disclosure for potential investors. Investors should consult the official statement. None of the information provided should be construed as a recommendation by MuniNet Guide, MuniNet LLC, Merritt Research Services LLC, or any of their employees. Information and analysis is for informational purposes only.

by Jeffrey L Garceau