DALLAS — Several sizeable deals are set to price this week in Texas, led by a $351.2 million issue from San Antonio for its city-owned CPS Energy utility that is expected to include some taxable Build America Bonds.
The Alamo city plans to offer $101.4 million of Series 2009B electric and gas system revenue bonds and $249.8 million of Series 2009C electric and gas system revenue taxable BABs in negotiated sales led by Goldman, Sachs & Co.
Another $209 million of Series 2009D revenue refunding bonds is slated to come to market later this month.
Public Financial Management Inc. and Estrada Hinojosa & Co. are co-financial advisers to the city. Fulbright & Jaworski LLP and Shelton & Valdez PC are co-bond counsel.
The tax-exempt bonds are structured as serials maturing in 2026 through 2034 and the BABs mature in 2026 to 2039.
Proceeds from the new-money bonds will finance completion of a coal-fired power plant, construction of peaking units, expansion of the electric distribution system and other needs. The power plant is set to begin operations by the middle of next year.
Fitch Ratings assigned a AA-plus rating to the bonds due to the city’s strong management practices, diverse and competitively priced power-supply portfolio, stable financial performance, and the utility’s large customer base.
Standard & Poor’s assigned a AA rating with a stable outlook to the issue and affirmed the rating on the city’s $3.5 billion senior-lien electric and gas revenue bonds outstanding and affirmed the AA-minus rating on $402 million of junior-lien revenue bonds outstanding.
Analysts said the ratings reflect the city’s strong, growing economy, “very competitive electricity rates,” strong financial metrics, and good management.
Moody’s Investors Service rates the utility’s credit at Aa1.
CPS Energy provides electric service to nearly 694,000 customers in Bexar County and parts of seven adjacent counties, and gas service to more than 320,000 customers in San Antonio and surrounding areas.
Elsewhere, the state plans to offer $75 million of general obligation bonds for its college student loan program at some point this week.
Wachovia Bank is lead manager for the negotiated sale by the Texas Higher Education Coordinating Board. Edward Jones, RBC Capital Markets, and Morgan Keegan & Co. are co-managers.
First Southwest Co. is the state’s financial adviser and Vinson & Elkins LLP is bond counsel.
Proceeds from the bonds, which are structured as serials maturing in 2013 through 2030, fund the state program that provides low-interest loans to eligible students.
Moody’s assigned a Aa1 rating to the bonds and Standard & Poor’s assigned a AA rating.
The Harris County Cultural Education Facilities Finance Corp. is bringing $200 million of fixed-rate health care revenue bonds to market on behalf of the Texas Children’s Hospital.
JPMorgan is lead underwriter for this week’s negotiated sale.
Ponder & Co. is the financial adviser to the conduit issuer, which has refunded more than $1.38 billion of variable-rate debt issued for a handful of Texas health systems since August.
Standard & Poor’s assigned a AA rating and Moody’s assigned its Aa2 rating to the bonds.
Triple-A rated Irving has two tranches worth about $69.3 million set to price and officials plan to come to market this week and next.
First Southwest is the city’s financial adviser and Vinson & Elkins is bond counsel.
Estrada Hinojosa is lead manager for $37.5 million of general obligation refunding and improvement bonds that are expected to price this week. About half the issue is refunding bonds.
New-money proceeds will fund upgrades to streets and parks, work at a city landfill, new equipment for the fire department, and other projects.
Merrill Lynch & Co. heads the underwriting syndicate for $24.8 million of waterworks and sewer system revenue bonds that will now get to market sometime next week, according to Chris Janning, senior vice president at First Southwest.
Moody’s rates the GOs Aaa with a Aa2 rating on the waterworks and sewer system. Standard & Poor’s assigned a AAA rating to the GO bonds and a AA rating on the water and sewer debt.
Analysts said the gilt-edged rating reflects a deep, diversified economic and employment base, “conservative and sophisticated financial management policies that include long-range budget and capital plans,” as well as strong general fund reserves that are augmented by additional reserves, providing significant revenue-raising flexibility.
Standard & Poor’s said the AA rating is based on a subordinate-lien pledge of net revenues of the city’s water and sewer system.
