California sold more than a third of the $4 billion of notes it is offering this week to avert a cash shortage, with tentative yields as much as 1.1 percentage points higher than last year to entice buyers.
Notes due May 20, 2009, may offer a yield of 3.75 percent to 4 percent and debt to be paid off June 22 might yield 4.25 percent to 4.50 percent, said a spokesman for California Treasurer Bill Lockyer. The state sold $7 billion of notes last year at 3.37 percent.
California, home of the world's eighth largest economy, is seeking to cover a shortfall in tax collections that led Standard & Poor's to threaten the state with a lower credit rating last week. The state is pressing forward, even as rising borrowing costs drive borrowers including New York City and Ohio to put off long-term bond sales.
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