The state also auctioned $1.2 billion in general-obligation bonds Thursday, priced to yield 2.4%. California is the most-indebted U.S. state, with $87 billion of bonds paid from general fund, or double that from a decade ago.

Broad municipal bond ETFs weight holdings by market capitalization, so the most heavily indebted issuers receive the largest weights. For instance, Californian debt is the largest component in most broad munis ETFs, including a 23.0% weight in the iShares National AMT-Free Muni Bond ETF (NYSEArca: MUB), which tracks broad investment-grade munis. [Muni Bond ETFs: Considerations & Factors to Watch]

iShares California AMT-Free Muni Bond ETF

For more information on the munis market, visit our municipal bonds category.

Max Chen contributed to this article.