State bond sale raises $3.2 billion

California sold $3.2 billion of tax-exempt bonds to help cope with a state budget deficit.

Individual investors bought $1.46 billion of the securities, or 46% of the total, in a three-day offering, with institutions buying the rest.

There was enough demand for the debt to lower the yield on bonds due in July 2009 to 2.05%, 0.15 of a percentage point less than the rate indicated at the start of the offering Tuesday. That compares with a 1.93% yield on U.S. Treasury notes with the same maturity.

Because of a dedicated tax revenue stream, the “economic recovery” bonds sold are rated one level higher than California’s general obligation debt by Moody’s Investors Service and three levels higher by Standard & Poor’s.

“We insured none of the bonds, because they were highly rated, excellent credits and because they were shorter maturities, among other reasons,” Tom Dresslar, spokesman for California Treasurer Bill Lockyer, said in an e-mail Thursday.