DALLAS — Laredo Independent School District will rely on its own ratings when it goes to market Dec. 18 with $47 million of general obligation bonds approved by voters last month.
Proceeds of the deal will allow the district to buy school facilities originally financed with lease revenue bonds in 2004. The bonds are expected to yield net present value savings of 9.5%, with no extension of original maturity, officials said.
The refunding debt does not qualify for the Texas Permanent School Fund's triple-A guarantee. But the district's underlying ratings of A1 from Moody's Investors Service and AA-minus from Fitch Ratings remain in the upper investment-grade range.
"The A1 rating is reflective of sound financial management that has led to healthy levels of reserves," said Moody's analyst Adebola Kushimo. "The rating also reflects the sizeable tax base that benefits from significant cross border trade with Mexico, while considering the economically disadvantaged population served by the district."
With $177 million in previously issued debt, Laredo ISD's debt burden is "elevated but manageable," Kushimo said, "with approximately 72% of debt supported by state program revenues, and plans for additional borrowing in the near term."
On Nov. 5, about 72% of voters approved Laredo ISD's proposed $125 million bond proposal, including $47 million to refund outstanding lease revenue bonds and $77 million for school facility improvements.
"This authorization was not anticipated by Fitch for several years," noted Fitch analyst Jose Acosta. "The district accelerated its debt plans as additional capital needs were identified."
The remainder of the new money authorization is scheduled for issuance in 2014 and is projected to require a sizable 73% increase in the debt service tax rate to 40 cents per $100 of taxable assessed value, up from the current 23 cents.
