State bonds snapped up

Nothing like 6 percent yields - tax-exempt - to get the attention of investors, especially when you can hardly get half that with a CD (and get taxed). Individual investors so far have placed orders for 75 percent of the $4-billion in bonds the state of California is selling this week. The sales are necessary to begin $500 million worth of infrastructure projects that were halted in mid-December because the state was running out of cash. California has the worst rating of any state in the nation. (By the way, the 6 percent yield is for a 27-year issue.) From the SF Chronicle:

Early estimates on Monday showed the state will likely pay between 3.25 percent and 6 percent interest on the bonds. In June 2008, when the state last sold general obligation bonds, the rates ranged between 1.75 percent and 5.3 percent. The final rates for this week's sale will be locked in on Wednesday when institutional investors, such as large investment banks, purchase the remaining bonds after two days of sales to individual investors.