BILL ANALYSIS Ó
AB 1408
Page 1
ASSEMBLY THIRD READING
AB 1408 (Banking and Finance Committee)
As Amended May 2, 2011
Majority vote
BANKING & FINANCE 9-1 APPROPRIATIONS 12-4
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|Ayes:|Eng, Achadjian, Charles |Ayes:|Fuentes, Blumenfield, |
| |Calderon, Fletcher, | |Bradford, Charles |
| |Fuentes, Skinner, Lara, | |Calderon, Campos, Davis, |
| |Perea, Torres | |Gatto, Hall, Hill, Lara, |
| | | |Mitchell, Solorio |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Harkey |Nays:|Harkey, Nielsen, Norby, |
| | | |Wagner |
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SUMMARY : Makes a technical change to the State General
Obligation Bond Law, to allow the minimum denomination of bonds
that can be sold to $25 or multiples of that sum.
EXISTING LAW : The State General Obligation Bond Law requires
that bonds must be sold in minimum denominations of $1000.
(Government Code Section 16731.)
FISCAL EFFECT : According to Assembly Appropriations Committee,
this change will not create any additional costs for the state
or the Treasurer's office.
COMMENTS : This is a technical change to the law, sponsored by
the State Treasurer.
Government Code Section 16731(a) of the General Obligation Bond
Law (GOBL) requires that general obligation (GO) bonds be sold
in minimum denominations of $1,000 or multiples of that sum. In
the past, this requirement worked well for the issuance of bonds
since traditional fixed-rate bonds were generally sold in $5,000
increments. However, due to the evolving nature of the bond
market and the magnitude of authorized but unissued bonds
remaining to be sold, flexibility is needed in determining the
minimum denominations of bonds in order to achieve the best
structure and rates possible for future bond sales. For
AB 1408
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example, one product that could potentially open up a largely
untapped investor base requires that bonds be sold in minimum
denominations of $25 or multiples thereof.
Analysis Prepared by : Mark Farouk / B. & F. / (916) 319-3081
FN: 0000571