Sorry to have gone AWOL for so long. Was on vacation last week, and this week I have no excuse. Thanks for checking in spite of that.
Before vacation, I talked about California Treasurer Bill Lockyer’s effort to attract individual investors to buy some of the $43 billion worth of infrastructure bonds approved by voters in November.
Looks like he succeeded, getting individual investors to buy 28 percent of the initial $2.5 billion bond sale last week, according to a Treasury press release that came out today:
“We’re delighted with the results,” said Lockyer. “Californians answered the call to directly invest in a stronger, better state. The rebuilding of California is helped when residents have a personal stake in the project. If we can maintain or improve these encouraging results in future sales, taxpayers will benefit because increased individual demand for bonds reduces the state’s debt costs.”
The $2.5 billion sale culminated today with mutual funds, insurance companies and other institutional investors buying a little more than $1.8 billion of the general obligation (GO) bonds. Individual investors purchased the balance of $690.2 million — or 28 percent of the $2.5 billion — during a two-day, early order period that ended Tuesday. Investors’ yields on the bonds ranged from 3.65 percent to 4.78 percent, depending on the maturity date. High demand allowed the state to lower its borrowing costs on virtually all of the bonds, regardless of the maturity date.
The bonds will finance a variety of public works projects across California, including: schools and universities, libraries, children’s hospitals, parks, and clean air and water projects.
To boost investment by individuals during the early order period, Lockyer launched an unprecedented marketing and Web-based campaign. The effort featured a first-of-its-kind Web site, managed by Lockyer’s office, which provided information on how to purchase bonds in the early order period, and links to brokers who placed investors’ orders. To help direct investors to www.buycaliforniabonds.com, the campaign also included radio and newspaper ads in the Bay Area and Central Coast. The Web site will be operational in future GO bond sales.
The way I see it, from my infantile buy-high-sell-low investment acumen, is, why just pay the taxes that service these bonds when you can earn some of that interest back by buying them?
I’ve put out some feelers to someone who knows something about this, but I’m still waiting for that call …