The Californian State Treasury could spend up to $12 billion on commercial asset-backed securities next year, following the signing last week by Gov. Gray Davis of a bill seeks to modernize the state's investing practices.

The bill, dubbed the "electronic bidding bill", will modernize not only the technology involved in California's investment process, but "[will bring] the competitive bidding process up to date and in line with current industry practices," said State Treasurer Philip Angelides. This will allow the state to invest in higher yielding bonds, such as commercial and commercial asset-backed paper.

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