DALLAS — Harris County, Texas reported strong demand from institutional investors Aug. 13 when it priced $196 million of general obligation road bonds bearing top ratings.
True interest cost came to 3.18% on maturities through 2034, with an all-in cost of 3.21%. All maturities priced as premium bonds with yields on 5% coupons on the long end yielding 3.767%.
Some of the longer maturities were oversubscribed by a factor of seven, said Lester Byrd, vice president for financial advisor First Southwest Co.
"I think the key factors in today's deal were the name, the credit and the fact that Goldman Sachs did a real good job of pricing it aggressively," Byrd said.
Given the relative dearth of issuance this year, especially from top-rated credits, Mike Austin, director of financial management for the county, said he expected strong demand.
Terry Thornton, vice president for bookrunner Goldman Sachs & Co. was lead banker on the deal with First Southwest Co.'s vice chairman Michael Bartolotta and vice president Trey Cash as financial advisors.
Siebert Brandford Shank & Co. was co-senior manager with co-managers Robert W. Baird, Bank of America Merrill Lynch & Co, Barclays, Morgan Stanley, Raymond James and Ramirez & Co.
Proceeds will take out commercial paper used for road construction in the county, Austin said.
"We have a total of $260 million of commercial paper capacity," Austin said. "We're close enough that we need to take it out with long-term financing."
The bonds will mature in two series, through 2021 and 2034.
The county had not issued any debt in its own name this year or in 2013 but priced $170 million in the name of the Harris County Flood Control District May 9 with maturities through 2029. Those bonds drew a true interest cost of 2.91% and all-in cost of 2.95%. After this week's deal, the county and the flood control district, which it operates, will have $2.7 billion of debt outstanding.
The bonds carry triple-A ratings from Moody's Investors Service and Fitch Ratings with stable outlooks.
The county is planning $1.46 billion of projects over the next six years, with about half of that coming in the next two years, Austin said. Officials do not expect to issue any more bonds until next year unless refunding opportunities appear.
As the largest county in Texas and the third largest in the nation, Harris County includes all but a small portion of the city of Houston with a population totaling 4.2 million. The county's population grew 20% between 2000 and 2010, with 75% of that growth coming in incorporated areas.
"A resurgent energy sector aided economic recovery starting in 2011, and favorable economic trends have led the county's unemployment rate to fall to 5.0% in May 2014, on par with the state average but well below the national average of 6.2%," Fitch analyst Jose Acosta noted in his July 31 report.
