State sells $4.1 billion in general-obligation bonds

California sold $4.1 billion of general-obligation municipal bonds Wednesday, trimming the offering after the state couldn’t refinance as many bonds as officials had anticipated last week.

The deal was cut from an expected size of $4.8 billion.

The bonds are refinancing securities issued over the last 11 years at higher interest rates. The state’s goal was to sell as many new bonds as it could to get an interest rate savings on the older bonds.

Because of the rates demanded by investors, California wasn’t able to meet the full interest savings it had sought, Treasurer Bill Lockyer’s office said.

But the state still will save $205 million in interest on the pared-down deal, Lockyer said.

The bonds were sold in varying maturities, as long as 26 years. The annual interest yield on the longest-term issue was 4.50%. Bonds maturing in five years had a yield of 3.64%.

Because California bond yields are exempt from federal and state income tax for state residents, the true yields are higher for investors, depending on their tax bracket.

Individual investors bought $225 million of California’s debt offering, the state said. Mutual funds, insurance companies and other institutional investors bought the rest.