California to sell more muni bonds

California, which just completed one of the largest municipal bond offerings in U.S. history, plans to go back to investors for another big chunk of change this month.

This time, the state plans to sell taxable rather than tax-free bonds.

The offering, which could come next week or the week of April 20, could raise as much as $4 billion, said Tom Dresslar, spokesman for state Treasurer Bill Lockyer.

Part of the offering would finance projects that don’t qualify for tax-free funding -- such as the stem cell research measure that voters passed in 2004.

The rest of the deal would finance infrastructure projects that usually are funded with tax-free bonds. The taxable bonds, which carry higher interest rates, would be affordable because the U.S. Treasury would pick up part of the interest cost under the new Build America Bond plan, part of the economic-stimulus program.

California will be one of the first big issuers out of the gate with Build America Bonds. That could turn out to be a smart move on Lockyer’s part, before the market is saturated with such debt, said Marilyn Cohen, head of Envision Capital Management in L.A.

But she urged Lockyer to follow the same sales format as with tax-free bonds and allow individual investors to place orders ahead of institutions.

“There are a lot of individual investors who . . . would take a look at these for tax-deferred accounts” such as IRAs, she said.

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