Spring Branch ISD Sale Leads Skimpy $375M Slate

DALLAS — Volume in the in the Texas municipal market remains light this week with less than $375 million of debt on the schedule, much of that in one issue.

The Spring Branch Independent School District will issue $194.6 million of bonds today through a competitive sale. This is the first sale from a $597 million bond package approved in November, and proceeds will fund replacement of two elementary schools, acquisition of 85 new buses, and upgrades to technology across the district.

First Southwest Co. is the financial adviser and Vinson & Elkins is bond counsel to the district, which is about 10 miles west of downtown Houston.

Today’s sale also begins the district’s 10-year program to replace 12 aging schools that were built between 1938 and 1967. Enrollment has leveled off at about 32,000 and most of the land within the district is developed.

Standard & Poor’s assigned a AA underlying rating to the sale and Moody’s Investors Service assigned its Aa2 rating. Analysts cited the school system’s location in the Houston metropolitan area and experienced financial management team as credit strengths.

The bonds also will be backed by the state’s triple-A rated Permanent School Fund

Austin plans to offer $50 million of taxable electric utility system revenue refunding bonds Thursday. The debt is expected to be insured by Assured Guaranty Corp.

The PFM Group is the financial adviser to the Lone Star state capital city and Fulbright & Jaworski LLP is bond counsel.

Banc of America Securities LLC leads the underwriting syndicate for the negotiated sale, which takes out some taxable commercial-paper notes.

Moody’s assigned an A1 rating to the sale and revised its outlook on the credit to positive from stable due to the “utility’s strengthening financial record including its focus on risk management.”

Analysts also affirmed the A1 rating on the city’s $877.5 million of electric-system debt outstanding, as well as the $540.9 million of combined utility system bonds outstanding.

The East Texas town of Tyler expects to bring about $5.2 million of water and sewer system revenue bonds to market this week or next. Morgan Keegan & Co. is sole underwriter for the negotiated sale.

Proceeds will be used to acquire land for a new wastewater-treatment plant and extensions to the system.

First Southwest is the financial adviser to the growing city of nearly 100,000 residents about 100 miles east of Dallas. Tyler’s population has increased more than 16% since the 2000 Census.

Fulbright & Jaworski serves as bond counsel.

Standard & Poor’s upgraded its rating on the credit to AA from AA-minus due to improving margins that led to strong debt-service coverage and liquidity, as well as continuing expansion and diversification of the area economy and customer base.

“We believe Tyler officials will maintain the city’s sound financial position,” credit analyst Paul Jasin said. “We also think system net revenues will remain sufficient to sustain strong coverage despite potential additional debt related to increasing system capacity as the city moves into its role as a regional water and wastewater provider.”

Moody’s assigned a Aa3 rating to the deal and affirmed the rating on $54 million of parity debt outstanding.

El Paso is still trying to get a two-tranche, GO issue to market worth about $78.1 million. The debt was on the schedule for last week and is now again on this week’s calendar.

The city plans to offer nearly $56.7 million of general obligation bonds and $21.4 million of GO refunding bonds in a negotiated sale led by Banc of America Securities. Wachovia Bank NA and Morgan Stanley are co-managers.

First Southwest is the city’s financial adviser and Fulbright & Jaworski is bond counsel.

The refunding bonds are structured as serials maturing from 2009 through 2014, whereas the new-money debt matures through 2033.

Standard & Poor’s assigned a AA rating to the sales due to the city’s increasingly diversified economy, “strong financial management practices,” and “preeminence as a regional economic center due to its strong access to international trade.”

Fitch rates the city’s credit at AA-minus and Moody’s rates it Aa3.

 

 

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