DALLAS — Triple-A rated Collin County is bringing nearly $73.9 million of general obligation debt to market this week in two tranches that may include some Build America Bonds.
The growing North Texas county plans to offer nearly $46.1 million of limited tax refunding and permanent improvement bonds and about $27.8 million of unlimited tax road and refunding bonds Thursday. The new-money components of both tranches may include some BABs. The decision on exactly how much will be made before pricing.
The underwriting syndicate for the negotiated sales include Citi as lead manager with Morgan Keegan & Co., Stifel, Nicolaus & Co., and Wells Fargo Brokerage Services LLP as co-managers.
First Southwest Co. is the financial adviser to the county, which sits just northeast of Dallas and has experienced a population boom for several decades. Vinson & Elkins LLP serves as bond counsel.
Proceeds will fund an addition to the county courthouse in McKinney, upgrades to various parks and roads, additions to juvenile justice alternative-education and detention facilities, and refund about $30.4 million of Series 1999 and Series 2001 debt.
Each tranche of bonds is structured as serials maturing in 2010 through 2029. The debt won't be insured due to the county's gilt-edged ratings.
David Medanich, vice chairman at First Southwest, said the amount of BABs depends upon where the market is during pricing and what will be most efficient for the county.
"Right now it seems BABs are proving to be more efficient in the 15-, 20-, 30-year range, and we'll be meeting with the county [today] to compare the numbers and at that point the county will decided whether to use the BABs or not," he said.
Issuers of BABs, which were introduced earlier this year as part of the federal stimulus package, receive a 35% subsidy from the Treasury Department on their interest costs.
County Administrator Bill Bilyeu said the county will elect to use the BABs only if they help lower issuance costs.
"We're looking at yields now to see what structure will be best for the county," he said. "We'll sit down with David [today] and make a decision."
Standard & Poor's assigned its AAA rating with a stable outlook to the bonds.
Analysts said the county's "substantial participation in the north-central Texas economy, continued deepening and diversification of the property tax base, strong wealth and income indicators, good financial management, which has resulted in very strong reserve levels, and very low direct-debt burden" are reflective of the highest possible rating.
"A significant corporate presence and independent employment base together remain, in our opinion, one of the cornerstones of the county's economic and employment base," Standard & Poor's analysts said.
Moody's Investors Service assigned its Aaa rating to the sale and affirmed the rating on the county's $208.5 million of unlimited tax debt outstanding and $126.7 million of outstanding limited tax debt.
Analysts said the rating reflects Collin County's "expansive tax base supported by a strong socioeconomic profile, historically stable financial operations, and manageable debt burdens."
The county's fiscal 2009 taxable-assessed valuation of $71.82 billion is about 40% higher than five years earlier. Officials seek to maintain a fund balance of at least three months' expenses, according to analysts.
Fitch Ratings doesn't rate the county's underlying credit.
The county began its current debt-sale cycle following approval of a $328.9 million bond package in November 2007, as part of its capital improvement plan. Most of the projects outlined in the bond package will fund transportation projects across the growing county.
Following the coming sale, the county will have about $255.1 million of authorized but unissued debt that officials anticipate coming to market annually over the next five to seven years.
According to the 1960 census, there were 41,247 people living in all of Collin County. The population rose 86% between 1990 and 2000 and has increased from 491,675 as of the 2000 census to nearly 750,000 currently. Some estimates show that the county's population grows by nearly 100 a day.
