Yosemite National Park – California, Source: wikimedia

The State of California is scheduled to issue $2.3 billion dollars in Various Purpose General Obligation bonds in two parts. In order to refinance its outstanding debt, the state will issue $1.65 billion in Refunding Bonds.  Proceeds from the remainder of the total, $650 million, will fund a variety of voter-approved initiatives related to public health and education.

About the Bond

California’s negotiated bond issuance is slated for sale the week of September 5th, 2019. Jefferies and Stifel lead the investor group as Joint Senior Mangers, with Ramirez & Co., Inc. as a Co-Senior Manager. The primary purpose of this bond is to refinance The Golden State’s commercial paper debt, which accounts for the lion’s share of the total issuance.

The state will use the remaining proceeds to fund several capital projects and public services approved through ballots reaching back over 3 decades. These initiatives include several capital projects related to the restoration and maintenance of public spaces[1], the funding of stem cell research[2], and earthquake safety retrofitting of structures[3].

These bonds are general obligations of the State to which the full faith and credit of the State is pledged. The principal of and interest on all State general obligation bonds, including the Bonds, are payable from moneys in the General Fund, subject under State law only to the prior application of moneys in the General Fund to the support of the public school system and public institutions of higher education.

In the opinion of Bond Counsel, interest on the Bonds is excluded from gross income for federal income tax purposes and State of California personal income taxes. The major bond rating agencies have given this bond an overall favorable rating:

State Financial Information

California is the world’s 5th largest economy and the largest state in the Union by population. As of July 2019, the state reported an unemployment rate slightly above the national average at 4.1%, while boasting a per capita personal income of $62,586 as of 2018, and a median household income of $71,805 as of 2017. California’s economy is exceptionally diverse, primarily focused on professional services, education, and healthcare. 

Snapshot of the state’s finances as of FY 2018 ending on June 30th 2018.

Provided above is a quick snapshot of financial characteristics of the State of California, courtesy of Merritt Research Services, LLC. (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.

These details and more on purposes, security, risks and other matters pertaining to these California General Obligation Bonds can the found in the preliminary official statement, provided by MuniOS. After registering, if needed, visitors can link directly to the official statement as well as an investor’s roadshow by searching for ‘California’.

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.

Potential investors should rely only on the official documents and figures provided in the official statement (prospectus). Although the numbers presented in this summary are primarily derived from public documents, including issuer audits, issuer reports and other public sources such as federal reporting agencies , they are not intended to replace official information presented in connection with the bond sale. Medians provided by Merritt Research Services may differ from official sales documents due to methodology or survey base variances.