Monday, November 22, 2010 – 11:30 a.m.

Last weeks debt sale by the State of California was nothing but a success.

Thirty year debt produced a federal and state tax-free yield of 7.50%. An amazing spread over its U.S. Treasury counterpart, which yielded 4.25% on Friday.

That’s a whopping spread of 3.25%.

State officials were quick to pronounce the demand for the state’s debt was high. At 7.50% you bet it was.

The 6-month note yielded 1.50% compared to the U.S. Treasury Bill equivalent yield of 0.19%

California’s borrowing costs will continue to climb as the budget situation worsens and the potential of a long-term default climbs.