DALLAS — Two issuers recently upgraded to triple-A and one of the fastest-growing school systems in the state lead the way this week in the Texas muni market.
Leander Independent School District will issue $277 million of general obligation bonds Tuesday through a negotiated sale led by RBC Capital Markets.
Southwest Securities Inc. is the financial adviser to the district and McCall, Parkhurst & Horton LLP is bond counsel.
Fitch Ratings assigned an A-plus underlying rating to the sale, while Standard & Poor’s upgraded its rating two notches to AA-minus from A due to “strong income levels.”
Standard & Poor’s analysts said the upgrade also reflects the district’s “ongoing growth, leading to diversity, triggered by improved access to the greater Austin area, and consistently strong financial performance, supported by strong financial management practices.”
Moody’s Investors Service upgraded its rating on the district to A3 from Baa1 in January 2001,
The bonds also come to market with the triple-A wrap provided by the state’s Permanent School Fund.
This is the first sale from a $558 million referendum passed by voters in November. Officials want to build two new high schools, five elementary schools, and acquire land for a seventh high school campus with proceeds from the approved bond package.
Leander ISD is one of the most rapidly expanding districts in the state. A study commissioned by the district last year showed more than 14,000 new students flooding the district over the next four years with another nearly 18,000 coming by 2016, pushing enrollment to nearly 60,000 for the 2017 school year.
The district began this school year with an enrollment of about 26,500 in 15 elementary schools, five middle schools, four high schools, and two alternative campuses. The school district encompasses the cities of Cedar Park, Jonestown and Leander, as well as parts of northwest Austin.
Fresh off an upgrade to triple-A, Harris County is coming to market with $22 million of tax and subordinate-lien revenue refunding bonds. RBC is lead manager for the negotiated sale and First Southwest is the financial adviser to the county.
Earlier this month, Standard & Poor’s raised its underlying rating on Harris County to AAA from AA-plus, citing the county’s “substantial and continually diversifying economic and property tax base, continued maintenance of strong financial reserve levels, low direct debt levels with modest capital needs relative to the resources available, additional financial resources available through surplus toll road revenues, and strong financial management.”
Fitch rates the county’s GO credit at AA-plus and Moody’s rates is at Aa1.
Harris County has added nearly half a million new residents since the start of the decade, pushing the total population to roughly 3.9 million. The county, which includes Houston, is more populous than 25 states and is the third-largest county in the country.
In the competitive market today, Richardson plans to issue $10.7 million of certificates of obligation on the heels of an upgrade to AAA from AA-plus by Standard & Poor’s.
Analysts cited management’s “maintenance of strong reserves established by policy” in the upgrade of the suburb just north of Dallas. Richardson’s population of about 102,000 is an increase of more than 11% since 2000. And the city’s 2008 taxable-assessed value of $9.48 billion is up 12% from five years ago.
First Southwest Co. is the city’s financial adviser and Fulbright & Jaworski LLP is bond counsel.
Moody’s assigned its Aa1 underlying rating to today’s issue and affirmed the rating on the city’s roughly $264.4 million of GO debt outstanding, including the sale. Fitch doesn’t rate the city’s credit.
Insurance will be at bidder’s option, although city finance director Kent Pfeil said the now gilt-edged underlying rating may negate the need for insurance.
The West Texas town of Lubbock is bringing $2.1 million of general obligation bonds and $84.5 million of tax and waterworks system surplus revenue certificates of obligation to market at some point this week.
The underwriting syndicate for the negotiated sale includes Morgan Stanley, Banc of America Securities LLC, Merrill Lynch & Co., and Morgan Keegan. RBC is the financial adviser to Lubbock, which has a population of more than 215,000.
Proceeds from the bonds will fund street-improvement projects and proceeds from the certificates will finance a number of projects in the city’s capital-improvement program.
The city’s GO debt carries underlying ratings of Aa3 from Moody’s and AA from Fitch.
Standard & Poor’s upgraded the city’s credit to AA-plus from AA due to the its role as a regional economic center and the City Council’s willingness to raise utility rates when necessary.
While the city’s ad valorem property taxes back the GO debt, most of the debt service on the certificates will be met with revenues from the water, wastewater, and electric utility operations.
