DALLAS — A competitive sale from a triple-A rated North Texas county and a $150 million, two-tranche refunding from a Harris County conduit issuer top this week’s docket. Once again, most of the issuers bringing debt to market are rated in the double-A category or higher.
Denton County plans to offer about $104.3 million of general obligation bonds today in a competitive sale.
Southwest Securities Inc. is financial adviser to the county, which carries underlying ratings of AAA from Standard & Poor’s and Aa1 from Moody’s Investors Service.
Analysts said the gilt-edged rating reflects the county’s sustained tax-base growth and diversification, above-average income levels, conservative financial-management policies, and continued sound financial performance. Moody’s also affirmed the Aa1 rating on $281.8 million of GO debt outstanding.
This sale comes from a $495 million authorization approved by voters in November and proceeds will fund road upgrades and construction of county buildings.
Following the issue, the growing county will have about $471 million of authorized but unissued bonds.
Denton County sits just north of Dallas-Fort Worth International Airport and has benefited from easy access to the airport and most parts of the metroplex.
The taxable-assessed value averaged 9% growth the past five years to $52.6 billion for fiscal 2009, although growth has abated somewhat due to the overall national recession. Moody’s said home values in the county have slid 4% and new-home construction has slowed, according to officials.
The county’s population of nearly 600,000 is up 38% from the 2000 Census. The estimated population of the entire North Texas region is about 6.6 million.
The Harris County Cultural Education Facilities Finance Corp. continues plans to fix out variable-rate debt it has sold for various issuers with the sale of $100 million of Series 2009A hospital revenue refunding bonds and $50 million of long-term rate revenue refunding bonds this week. JPMorgan is lead underwriter for this week’s negotiated sale. Since August, the finance corporation has refunded more than $1.38 billion of variable-rate debt issued for a handful of health systems in the county.
The bonds being sold this week were issued on behalf of The Methodist Hospital System in Houston. The issuer also expects to bring $450 million of Series 2009C-1 variable-rate demand bonds in commercial-paper mode and about $136.5 million of Series 2009C-2 VRDBs in daily mode to market soon.
Standard & Poor’s assigned a AA rating to the bonds due to the hospital’s “sound business profile as an academic medical center that has evolved into a regional system with four well-placed facilities in the growing metropolitan Houston market.”
Analysts said officials are “managing a series of major capital projects that should position Methodist well for the upcoming decade,” including a new hospital in west Houston. The system currently operates four hospitals with 1,362 beds in and around Houston.
El Paso expects to price about $17.6 million of GO refunding bonds this week through a negotiated sale led by Southwest Securities. And the West Texas town also has a $113.7 million issue of taxable GO pension bonds on tap, but may not get that deal to market until next week.
Citi is lead underwriter for the pension-bond sale with Merrill Lynch and Southwest Securities as co-managers. Proceeds from that issue will be used to help finance unfunded liabilities in the city’s Fireman and Policemen pension fund.
First Southwest Co. is the city’s financial adviser and Fulbright & Jaworski LLP is bond counsel.
Standard & Poor’s assigned a AA rating to all the bonds, citing the city’s deep and diverse economy as a credit strength. Analysts said the unfunded portion of the pension fund stood at $212.7 million at the end of 2007, which is down from $317.9 million at the end of fiscal 2006.
Officials structured the pension bonds amortization schedule with a five-year principal maturity and a bullet maturity in 2014 in hopes of receiving a lower interest rate on the bonds, according to analysts.
The city’s GO debt carries underlying ratings of Aa3 from Moody’s and AA-minus from Fitch Ratings.
Highland Village is bringing $8.3 million of combination tax and revenue certificates of obligation to market this week on the heels of an upgrade from Standard & Poor’s.
Analysts raised the credit to AA-plus from AA-minus due to “the continued diversification of the city’s tax base and the maintenance of strong general fund reserve levels.”
Southwest Securities is lead manager for the negotiated sale, with RBC Capital Markets and Crews & Associates Inc. as co-managers.
First Southwest Co. is the financial adviser to the city.
The certificates are structured as serials maturing next year through 2029.
Standard & Poor’s analysts said the tax base of the growing North Texas town averaged 7.6% annual growth the past five years to about $1.62 billion for fiscal 2009.
Fitch Ratings assigned a AA-minus rating to the sale. Analysts said the rating reflects the town’s “consistent trend of favorable financial performance, above-average overall debt load and limited borrowing needs.”
The population of Highland Village, which is in Denton County, is up nearly 36% since the start of the decade at about 16,500.
