Grand Prairie ISD Refunds Variable-Rate Debt With $71.3M Sale

DALLAS — Grand Prairie Independent School District sold about $71.3 million of unlimited-tax refunding bonds yesterday, converting all its outstanding variable-rate debt to fixed-rate bonds.

The deal was initially set to price next week, but officials saw an opportunity to complete the sale at favorable rates yesterday.

“When we were looking at our long-range planning and where we want to be, we felt the market is in a good place to do this now and set a fixed rate on the bonds,” executive director of finance Carolyn Foster said.

RBC Capital Markets was lead manager for the negotiated sale. Southwest Securities Inc. is the district’s financial adviser.

Yields on the Series 2009 capital appreciation bonds ranged from 1.10% maturing this year to 6.45% maturing in 2040, according to preliminary pricing data from Thomson Municipal Market Monitor. The bonds, which are callable at par in August 2018, weren’t insured.

Earlier this year, the state suspended its triple-A rated bond guarantee program — the Permanent School Fund — until September at the earliest due to the declining value of the fund. Most of the Texas school districts that have brought bonds to market over the past few months have been rated in the double-A category or higher.

Fitch Ratings assigned a AA-minus rating and stable outlook to the Grand Prairie ISD bonds, while affirming the rating on the  district’s $485 million of parity debt outstanding.

Analysts said the rating reflects the district’s “adequate reserve levels, expanding and diversified employment and tax base, substantial state support for operations and debt service, and high debt ratios with slow principal amortization.”

The taxable assessed valuation of the mostly residential district averaged 7% growth the past five years to $4.9 billion for fiscal 2009, according to analysts.

Officials managed to increase the general fund reserves by $6.5 million to $30.6 million last year and preliminary data shows better-than-budgeted results for fiscal 2009, according to Fitch.

Fitch said management’s actions should result in a budget surplus of $1.5 million to $2 million after the district initially adopted a $2.4 million deficit budget.

Standard & Poor’s assigned a AA-minus rating to the sale, citing the the district’s location and participation in the Dallas-Fort Worth economy and labor market, “good wealth and income levels, and financial position that remains strong despite ongoing internal transfers.”

Moody’s Investors Service rates the district’s debt outstanding at A1.

While the district’s enrollment rose slightly to about 25,600 this year, the student population had been expanding by about 3% annually and continued growth is expected despite the national slowdown in the housing market.

“The district continues to grow and we’re looking at holding another bond election next spring,” Foster said.

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