California Sells First Phase of Bond Deal

California sold the first phase of its long-awaited $11.9-billion power bond deal, with about 40 large bond mutual funds snapping up $4.25 billion of the adjustable-rate securities in just a few hours.

Proceeds from the $11.9-billion power bond sale will repay loans from banks and the state’s general fund that helped the state purchase power during its energy crisis in 2001. Customers of the state’s major utilities will pay off the bonds through surcharges of $2.50 to $3.50 in their monthly utility bills.

The successful sale bodes well for the state’s planned issue of $6.75 billion of fixed-rate bonds and $900 million of taxable bonds during the week of Nov. 4, traders said.