DALLAS — A handful of issues are set to price this week in Texas, including several from school districts and a three-tranche issue from a triple-A rated county.
As the flight to quality continues, most of the issuers bringing debt to market this week are rated in the double-A category or higher.
Travis County will offer about $31.4 million of general obligation debt in three tranches Tuesday through competitive sales.
D. Ladd Pattillo & Associates Inc. is financial adviser to the county, which carries underlying ratings of triple-A from all three major agencies. Vinson & Elkins LLP is bond counsel.
Standard & Poor’s analysts said the gilt-edged rating reflects the county’s deep economic base, sustained strong management, high income and wealth levels despite a significant student population, and a moderate overall debt.
The fiscal 2009 taxable-assessed value of the county, which includes the Lone Star capital city of Austin, rose 12% from the prior year to $95.3 billion and is up more than 65% since 2002.
The Round Rock Independent School District plans to issue $42.3 million of refunding bonds today through a negotiated sale led by Citi. Edward Jones and Siebert Brandford Shank & Co. are co-managers. First Southwest Co. is the financial adviser to the district and Vinson & Elkins is bond counsel.
The majority of the debt is structured as serials maturing in 2011 through 2019, with roughly $4.1 million of capital-appreciation bonds maturing this year and next. The Series 2009 bonds refund some of two series issued a decade ago.
“We saw that interest rates are better now than they were when we sold earlier this year, and we hope to save about $3 million over the life of the bonds,” chief financial officer Tracy Hoke said.
In January, the growing district sold $137.5 million of school building bonds in a negotiated sale led by RBC Capital Markets. Yields ranged from 1.15% with a 4% coupon in 2010 to 5.48% with a 5.25% coupon in 2034.
The total student population in the school system’s 42 campuses is about 41,000. Enrollment had been climbing by nearly 1,200 to 1,500 students for a few years, but growth has moderated to roughly 600 new students annually. Officials expect growth to continue with enrollment reaching 45,000 in 2013. A decade ago, the district served slightly more than 26,000 students.
Standard & Poor’s rates the Round Rock ISD’s underlying credit at AA and Moody’s Investors Service rates it at Aa1. The district’s taxable assessed value has averaged 6.4% annual growth over the past five years to $19.86 billion for fiscal 2009, according to analysts.
Officials have managed to nearly double the district’s general fund the past five years, and analysts cite strong financial management as a credit strength. The current general fund balance of $178.7 million is up from $89.7 million in 2004.
Round Rock was home to less than 25,000 people in 1980 and about 61,100 called the Austin suburb home in 2000. Now more than 100,000 people live in the once rural community.
The school district serves a total population of nearly 190,000, drawing students from Round Rock, Austin, and Cedar Park. In November, voters approved a $293.9 million bond package and the district plans to bring another $118.9 million of new-money bonds to market within the next year.
Taylor Independent School District is bringing $46.8 million of school building and refunding bonds to market today in a negotiated sale. The underwriting syndicate includes RBC Capital Markets, Edward Jones, Sterne, Agee & Leach Inc. and Raymond James & Associates Inc.
Specialized Public Finance Inc. is the district’s financial adviser and Vinson & Elkins is bond counsel.
The bonds, which are structured as serials maturing in 2010 through 2039, will be insured by Assured Guaranty Corp. The district’s underlying credit carries ratings of A from Standard & Poor’s and Baa1 from Moody’s.
The state’s triple-A rated Permanent School Fund, which wraps Texas school debt at a fraction of the cost of private bond insurance, has been suspended until September at the earliest because of losses experienced by the fund.
Proceeds from the sale will fund a new 1,200-student high school, and renovations to the existing high school. The new campus, which will be the first in the district in 40 years, is expected to be open in time for the beginning of the 2010-11 school year.
Dan Wegmiller, managing director of SPFI, said officials were waiting for the right time to issue the bonds.
“Now the market has improved to the point where it’s within the constraints of what the district told the taxpayers back in November,” he said.
Voters approved a $43 million bond package in November and about $38 million of this week’s sale is new money from that authorization. The remaining $5 million will be used to renovate the current high school into a middle school and won’t be issued until the new high school opens.
Taylor ISD serves about 3,100 students in five schools about 35 miles northeast of downtown Austin.