US state governments, seeking to expand the pool of potential lenders as their borrowing balloons, are beginning to look offshore.

Illinois has registered bonds for sale in Europe as part of a $3.5bn (€2.45bn) offering next week. New York State is considering tapping into foreign demand, and California Treasurer Bill Lockyer said last week that his state, the largest municipal bond issuer, is considering peddling its taxable debt abroad.