DALLAS — While economic upheaval the past few months has kept many Texas issuers on the sidelines, this week’s limited supply is more reflective of an abbreviated week due to the Thanksgiving holiday.
There’s only a handful of deals on the schedule this week, including a few smaller issues by Houston-area municipal utility districts and an Arlington refunding.
The North Texas city plans to price about $170 million of special-tax revenue bonds today to convert variable-rate bonds into fixed-rate debt.
Earlier this year, the Arlington City Council voted to refinance about half of the $325 million of debt issued to fund the city’s share of the new $1.1 billion stadium being built for the National Football League’s Dallas Cowboys. But the continued market volatility since then precluded the deal from getting to market.
Fiona Allen, deputy city manager for capital investment, said officials were ready to go in July, but “that’s about when the market went caddywumpus on us.”
She said the market has returned to “a sense of normalcy” and officials felt now was a good time to fix out the debt, which is secured through a voter-approved 0.5% citywide sales tax, a 2% hotel-occupancy tax, and a 5% car-rental tax.
The bonds were initially sold in 2005 in variable-rate mode and insured by MBIA Insurance Corp. When the insurer lost its triple-A rating earlier this year, city officials sought to convert the debt to fixed rate.
Public Financial Management Inc. is the financial adviser to the city and Vinson & Elkins LLP is bond counsel.
Moody’s Investors Service assigned an A2 rating to the sale, while both Fitch Ratings and Standard & Poor’s rate the special-tax bonds issued for the stadium at A.
Analysts said debt service is projected to rise slightly upon conversion of the debt, but modest revenue growth should shorten the maturity schedule and additional revenue from annual rental payments and stadium naming rights also should bolster reserves available for bond repayment.
The Calhoun Port Authority plans to offer $50 million of weekly adjustable-mode environmental facilities revenue bonds today through a negotiated sale led by Banc of America, which will also provides a letter of credit for the debt. RBC Capital Markets is financial adviser to the conduit issuer.
The bonds are subject to the alternative-minimum tax and proceeds will fund pollution-control projects at Formosa Plastics Corp.’s Texas plant.
The issuer, which sold a similar-sized deal a year ago on behalf of the same solid-waste and sewage facility, is a conservation and reclamation district.
Standard & Poor’s assigned a AA to the sale, and put the credit on its negative watch. Additional information on the rating and the sale wasn’t immediately available.
In the competitive market today, Cinco Southwest Municipal Utility District No. 1 plans to offer $8.5 million of contract revenue bonds and West Harris County Municipal Utility District No. 9 will issue $2 million of unlimited tax bonds.
First Southwest Co. is the financial adviser to the Cinco MUD, while Morgan Keegan & Co. advises the West Harris County utility.
Standard & Poor’s assigned a BBB rating to the West Harris district’s sale due to moderately high debt and a moderately concentrated tax base. Some credit strengths include access to the Houston area, a “very strong financial position,” and a low tax rate with competitive utility rates.
Analysts said the district is completely developed with water, sewer, and drainage infrastructure, and the taxable assessed value rose 20% over the past decade to $215 million for fiscal 2009 from $179 million in fiscal 1999.
Officials managed to end fiscal 2007 with an unreserved general fund balance of $2.8 million, or nearly three times operating costs, according to analysts.
