DALLAS — There’s a light docket this week in Texas with the market closed Monday for the Memorial Day holiday. There is nary a bond sale set to price in the competitive market and just a handful of negotiated issues on the calendar.
In the largest offering of the week, the Harris County Metropolitan Transit Authority plans to offer two tranches of sales and use tax debt worth $227.6 million. The authority will issue $184.7 million of sales and use tax bonds and $42.9 million of sales and use tax contractual obligations.
Merrill Lynch & Co. and Goldman, Sachs & Co. are joint book-runners for all the debt.
First Southwest Co. and Siebert Brandford Shank & Co. are co-financial advisers to the issuer and Andrews Kurth LLP is bond counsel.
One financial adviser to the authority said the bonds will be uninsured and include some taxable Build America Bonds on the long end. He said the board set a minimum-savings target of 40 basis points for the BABs, and if this week’s market can’t accommodate that threshold, the entire deal will be tax-exempt.
Proceeds from the bonds will fund construction of the authority’s light-rail system and other improvements and extensions to the transit system. Funds from the obligations will be used to acquire two prototype rail cars and begin design work for other cars. Both tranches are structured as serials with the bonds maturing next year through 2038 and the obligations maturing in 2010 through 2033.
Standard & Poor’s assigned a AA-minus rating to the bonds and obligations, citing the authority’s “ability to trim expenditures as needed, and good liquidity with proactive financial management.”
“The ratings reflect what we consider to be a very deep and diverse service-area economy in Harris County, and a stable and still growing sales tax base,” Standard & Poor’s credit analyst James Breeding said
Moody’s Investors Service assigned its Aa3 rating to the issue.
Northwest Independent School District is coming to market this week with the first sale from a $260 million bond package approved in November.
The suburban Fort Worth district will issue $65 million of unlimited tax school building as early as today in a negotiated sale led by RBC Capital Markets.
Morgan Keegan & Co. and Southwest Securities Inc. are co-managers.
Chief financial officer Jon Graswich said the sale may come later in the week, as there may be “slightly better rates after Tuesday.”
“It appears a lot of traders tend to take off around holidays, and we want to make sure we’re pricing in a full market to assure the best rate for our taxpayers,” he said.
First Southwest is the financial adviser to the school system, which is adding about 1,000 students a year. McCall, Parkhurst & Horton LLP is bond counsel.
Proceeds from the Series 2009 bonds will fund a new elementary school and a new middle school.
The bonds come to market with underlying ratings of AA-minus from Fitch Ratings and Aa3 from Moody’s.
Graswich said the district’s annual enrollment growth, which was hovering near 12% to 13% the past few years, is projected at around 8% for next year.
Northwest ISD is about 15 miles north of downtown Fort Worth and serves about 13,138 students at 19 campuses in 14 municipalities across Tarrant, Denton, and Wise counties. Officials project the current enrollment to nearly double in the next five years. Five years ago, the total student population was about 7,500.
Following next week’s sale the district will have about $517 million of debt outstanding. The district’s fiscal 2009 taxable assessed value of about $9.44 billion is nearly double the $4.8 billion in 2005.
Elsewhere, two North Texas suburbs have multi-tranche water and sewer system issues set to price this week.
Mesquite is bringing four tranches worth about $25.2 million to market and Lewisville plans to offer $17.3 million in two tranches.
Mesquite, which is just east of Dallas will issue about $4.2 million of general obligation refunding bonds, $11.2 million of combination tax and revenue certificates of obligation, $1.9 million of public property finance contractual obligations, and $8.2 million of wastewater and sewer system revenue bonds.
First Southwest is lead manager for the sales. Estrada Hinojsa & Co. and Jefferies & Co. are co-managers.
RBC is the city’s financial adviser and McCall, Parkhurst & Horton LLP are bond counsel.
Standard & Poor’s assigned an AA rating to the issues due to the city’s “sizable and diverse tax base and healthy financial operations.” Moody’s rates the city’s GO credit at Aa3 and the water and sewer debt at A1.
Mesquite’s population has been pretty steady at about 137,500 through this decade. But Standard & Poor’s reported some studies project a 16% increase in population by 2030.
Lewisville, which is just north of Dallas-Fort Worth International Airport, will offer $11.9 million of waterworks and sewer system revenue bonds and $5.4 million of GO bonds in negotiated sales with RBC and Crews & Associates Inc. as co-managers.
First Southwest is the financial adviser to the growing town of nearly 93,000. Vinson & Elkins is bond counsel.
Fitch assigned a AA underlying rating to the debt with a positive outlook, while affirming the rating on the city’s $100.8 million of parity debt outstanding. Standard & Poor’s assigned a AA-plus rating.
