California State Treasurer Fiona Ma announced the sale of $100 million of variable rate General Obligation bonds to fund projects authorized by the Water Quality, Supply, and Infrastructure Improvement Act, which was approved by voters in 2014.
The bonds will bear interest at a variable interest rate which will be determined weekly. The initial interest rate was set on the pricing date by the Underwriter, Siebert Williams Shank & Co. Following the initial weekly interest rate period, the weekly interest rate for the bonds will be determined by the Clarity BidRate Alternative Trading System (Clarity).
Clarity is an innovative electronic trading platform that enables a centralized marketplace for bidding, pricing, trading, and analyzing data for municipal variable rate securities. Investors in the bonds participate in a competitive bid process where they are able to directly bid each week for the bonds. Bonds are then allocated to investors based on their bid level and the final clearing rate.
“I strongly support Clarity’s goals to democratize the variable rate market by creating an investor controlled marketplace that maximizes transparency, leverages technology, and helps to promote a broader and deeper distribution of bonds which could lead to improving overall risk for issuers and investors alike,” said Treasurer Ma.
The bonds are secured by an irrevocable direct-pay letter of credit from State Street Bank and Trust Company and are rated AAA/A-1+ by S&P Global Ratings, AA/F1+ by Fitch Ratings and Aa1/VMIG 1 by Moody’s Investors Service.