DALLAS - San Antonio will go to market tomorrow with a $70.2 million offering of hotel occupancy tax subordinate-lien revenue refunding bonds -- a deal expected to present savings of approximately 7%.
Proceeds from the deal will take out debt issued in 1996 to finance an expansion of the Henry B. Gonzalez Convention Center.
JPMorgan will serve as lead manager for the deal, with A.G. Edwards & Sons Inc., Jackson Securities, and Citigroup Global Markets Inc. serving as co-managers.
Coastal Securities and Estrada Hinojosa & Co. serve as the city's co-financial advisers, and Fulbright & Jaworski LLP and Escamilla & Poneck Inc. serve as its co-bond counsel.
Winstead Sechrest & Minick PC and Shelton & Valadez PC will serve as underwriters' co-counsel for the deal. Bank of New York Trust Co. will serve as trustee for the 20-year deal.
Financial Security Assurance Inc. will insure the deal, which is rated in the A-plus range by all three agencies.
The Series 1996 bonds were priced at $95.553, and a 5.7% coupon, to yield 6.02% for bonds maturing in 2026.
"We're looking at pretty significant savings -- somewhere around 7%," said Jorge Rodriguez, a managing director and partner at Coastal Securities. "The deal is pretty much going to have the same structure as the 1996 bonds."
Rodriguez said that a seven-year call has been built into the structure of the deal.
"This gives us flexibility if we need to look at future expansion of the convention center," he said. "The shorter call keeps our options open if we need to get to our capital to fund an expansion."
The deal also expands the pledge on the city's 9% hotel occupancy tax to include all receipts, barring HOT revenue derived from a convention center hotel funded with a $207 million bond issue in 2005.
The city will come to market with at least two additional bond deals in coming weeks.
"The story for San Antonio is that the city has a new city manager," said Rodriguez, alluding to Sheryl Sculley, who joined the city's administration earlier this year. "She wanted to hold off on these bond issues until she was settled and had time to see what was happening."
Sculley could not be reached for comment.
As such, in addition to this week's bond offering, the city will issue $200 million of general obligation and certificates of obligation in mid-October. Rodriguez said the deal would include about $100 million of new money, while the remainder of the deal would be comprised of refunding bonds aimed at realizing present value savings for the city.
An additional offering, also tentatively scheduled for mid-October, would refund about $20 million of outstanding airport debt. (c) 2006 The Bond Buyer and SourceMedia, Inc. All rights reserved. http://www.bondbuyer.com http://www.sourcemedia.com
