Section 16754 Of Article 4. Sale Of Bonds From California Government Code >> Division 4. >> Title 2. >> Part 3. >> Chapter 4. >> Article 4.
16754
. (a) The bonds specified in the resolution shall be sold by
the Treasurer, at the time fixed by the Treasurer, and upon the
notice that the Treasurer may deem advisable, or at the time to which
the sale shall have been so continued, at a competitive sale to the
bidder whose bid will result in the lowest interest cost on account
of those bonds.
(b) The Treasurer shall reject any and all bids for the bonds
that shall be below the par value thereof plus the interest that
shall have accrued thereon from the date thereof or, if any past due
coupon or coupons have been detached from the bonds prior to the
delivery thereof, then from the due date of the latest coupon so
detached, to the date of the purchaser's payment for the bond.
(c) The method of determining the lowest interest cost bid shall
be prescribed in the bond resolution and shall be limited to either
the net interest cost method or the present worth basis method, also
referred to as the true interest cost, bond book basis, and Canadian
interest cost method.
(1) The net interest cost of each bid shall be determined by
ascertaining the total amount of interest that the state would be
required to pay under that bid, from the date of the bonds to the
respective maturity dates of the bonds then offered for sale, at the
coupon rate or rates specified in the bid, less the total amount of
the premium, if any, offered by the bid. The bid under which the
amount so ascertained is the least shall be deemed to be the bid
resulting in the lowest net interest cost.
(2) Under the present worth basis method, the bonds shall be
awarded to the bidder submitting the lowest interest rate bid, which
shall be determined by doubling the semiannual interest rate,
compounded semiannually, necessary to discount the debt service
payments to the specified interest computation date and to the price
bid.
(d) Under either method specified in subdivision (c), the sale
shall be for cash, payable upon the delivery of the bonds in
definitive form, or if the right to deliver temporary securities has
been reserved, then upon the delivery of the temporary securities.