DALLAS — A $217.5 million issue from Texas A&M University leads the way this week in the Texas municipal debt market.
The A&M Board of Regents plans to offer two-tranches of Permanent University Fund-backed bonds competitively Tuesday. About $152.4 million of Series 2009A bonds will mature from 2019 through 2034 and $65.1 million of Series 2009B bonds mature next year through 2034.
First Southwest Co. is the financial adviser to the system, and McCall, Parkhurst & Horton LLP serves as bond counsel.
Fitch Ratings assigned a AAA rating to the bonds secured by the PUF fund earlier this month, citing the fund’s “vast, highly diversified investment holdings” that had a market value of $8.8 billion on Nov. 30. Analysts also said the gilt-edged rating reflects the expertise of the University of Texas Investment Management Company, which manages the assets of the fund’s investment portfolio. Moody’s Investors Service rates the PUF bonds at Aaa and Standard & Poor’s rates the bonds at AA-plus.
This is the second sale by the A&M system this year. Last month, the Board of Regents sold $350 million of revenue financing system bonds.
The Texas A&M system includes nine universities with a total enrollment of nearly 110,000 students, seven state agencies, and one health science center.
Lubbock is coming to market with a two-tranche, $82.4 million general obligation sale this week. The growing city in the Texas panhandle plans to issue about $58.7 million of tax and waterworks system surplus revenue certificates of obligation and nearly $23.7 million GO refunding and improvement bonds through negotiated sales led Morgan Keegan & Co.
RBC Capital Markets is the city’s financial adviser and McCall, Parkhurst & Horton LLP serves as bond counsel.
The city carries underlying ratings of AA-plus from Standard & Poor’s, AA from Fitch, and Aa3 from Moody’s. Lubbock’s current population of nearly 220,000 is up almost 10% from 2000.
The Houston Independent School District plans to issue about $14.2 million of limited tax refunding bonds at some point this week in a negotiated sale led by Morgan Keegan.
HISD is the largest school system in the state with nearly 200,000 students in 293 schools. The district carries underlying ratings of Aa2 from Moody’s and AA-plus from Standard & Poor’s. First Southwest is the district’s financial adviser.
The Denton Independent School District also hopes to price $30.9 million of refunding bonds this week through a negotiated sale led by Morgan Keegan. RBC Capital Markets is the district’s financial adviser.
Debbie Monschke, director of administrative services, said the refunding combines two series of variable-rate debt into one fixed-rate series.
Denton ISD carries underlying ratings of AA-minus from Fitch and AA from Standard & Poor’s.
The growing North Texas district adds more than 1,000 students annually and has a total enrollment of nearly 23,400 students at 30 campuses.
Aransas County plans to issue about $4.5 million of certificates of obligation today through a negotiated sale led by Southwest Securities Inc. RBC is the financial adviser to the Gulf Coast county.
Fitch assigned an A-plus rating to the COs and affirmed the rating on $12.2 million of certificates outstanding.
Analysts said the rating reflects the county’s “growing tax base, modest debt levels with above-average amortization, and favorable financial results.”
A dependence on oil and gas, and tourism coupled with “the area’s vulnerability to storm and hurricane disasters is somewhat mitigated by the county’s solid reserves,” according to Fitch.
Officials have historically used pay-as-you-go financing for capital improvements while maintaining solid financial reserves, but “planned projects suggest that the county will turn to debt financing for future facility improvements,” analysts said.
Proceeds from this week’s sale will fund land acquisition and the design of a new county courthouse.
The area’s popularity for recreational fishing and bird watching has spurred development of waterfront and vacation homes steadily expanding the county’s tax base and is expected to continue, according to Fitch. Analysts said the county’s taxable-assessed valuation averaged about 13% growth the past five years.
Once again this week, a few utility districts are bringing low-rated or unrated bonds to the competitive market.
Lakeside Water Control & Improvement District No. 2-D will offer $2.8 million of unlimited-tax bonds today. The debt comes to market unrated by any of the major three ratings agencies. First Southwest is the financial adviser to the Austin-area district and Vinson & Elkins LLP serves as bond counsel
On Tuesday, Harris County Municipal Utility District No. 127 will issue about $3.7 million of waterworks and sewer system combination tax and revenue bonds and East Montgomery County Improvement District plans to offer $7.7 million of sales-tax revenue bonds.
Rathmann & Associates is the financial adviser to the Harris County district and GMS Group advises the improvement district.
Standard & Poor’s assigned underlying ratings of A to the East Montgomery County sale and BBB to the Harris County MUD deal. .
Harris County Utility District No. 16 will offer $1.3 million of unlimited tax bonds Wednesday. The bonds aren’t rated and Rathmann & Associates is the financial adviser to the Houston-area district.
Kaufman County Municipal Utility District No. 8 plans to offer $2.4 million of unlimited tax road bonds Thursday. RBC is the financial adviser to the district, which is southeast of Dallas.
