In the largest deal of the week,
First Southwest Co. is the financial adviser to the district and Kelly Hart & Hallman LLP is bond counsel.
The bonds, which are structured as serials reaching final maturity in 2028, will come to market with the triple-A backing of the state’s Permanent School Fund.
This is the first sale from a $586.9 million authorization approved by voters in November.
Last year, officials hired an educational consultant, Magellan K12, to help develop a plan to address the needs of the growing district, which serves more than 80,000 students in 144 schools.
Proceeds from the approved bond package will fund much-needed technology upgrades across the district, build six new schools, renovate athletic facilities, and upgrade existing campuses.
The district has at least 75 buildings that are more than 50 years old and more than 900 classrooms in portable buildings.
Standard & Poor’s assigned a AA underlying rating to the sale. Moody’s Investors Service assigned a Aa2 rating and affirmed the rating on the district’s $326.3 million of debt outstanding.
Two school districts are selling bonds this week that won’t be backed by the PSF because the districts’ debt level per student is higher than the maximum allowable for the program.
Analysts cited the rapidly expanding economy and tax base, and strong financial performance of the suburban
Chief financial officer Tracy Hoke said the upgrade is “absolutely important” for the district, as it should help lower costs of issuance and may possibly negate the need for private bond insurance, which comes at a much higher price than the PSF guarantee. She said the final decision on bond insurance won’t be made until right before the sale.
The district’s taxable assessed value has averaged 6.4% annual growth the past five years to $17.19 billion for fiscal 2008, according to analysts.
The school system’s serves about 40,500 students on 42 campuses. Enrollment had been climbing by nearly 1,200 to 1,500 students a year, but growth has moderated to roughly 600 new students. Officials expect growth to continue with enrollment reaching 45,000 in 2013.
First Southwest is the financial adviser to the district and Vinson & Elkins is bond counsel.
The underwriting syndicate for today’s negotiated sale includes Morgan Keegan & Co., Loop Capital Markets LLC, Citi, Siebert Brandford Shank & Co., and First Southwest.
RBC Capital Markets is the financial adviser to the
Proceeds will fund a new career and technology center, as well as a new auditorium and science laboratories for a high school.
Moody’s assigned its A3 underlying rating to the sale, and Fitch Ratings assigned an A-minus rating.
Other school districts are issuing debt this week with the credit enhancement of the triple-A PSF.
Texas City ISD will use proceeds to fund construction of a new kindergarten through fourth-grade campus, and a new school for fifth and sixth grades, as well as about 25% of a new high school.
Southwest Securities is lead manager for the negotiated sale, and RBC is the financial adviser to the
Banc of America Securities LLC leads the underwriting syndicate for the negotiated sale by Tomball ISD. Andrews Kurth LLP is bond counsel.
Chief financial officer Jim Ross said the district hopes to achieve savings of about 4% through the refunding of about $28.4 million of outstanding debt.
Proceeds from the $75 million of new-money bonds will fund about 10 projects, including two new elementary schools and a new high school.
RBC is the financial adviser to the district, which is about 35 miles northwest of downtown
Elsewhere, the North Texas town of
The city in suburban
Analysts cited the city’s property tax base diversification and reduced dependence on property tax revenues in the upgrade. Two large retail developments, one with a Wal-Mart store and the other with “high-end, boutique-type” retailers, have opened in the past year, according to analysts.
“We think the city’s increasingly diversified tax and revenue base, coupled with its good financial management practices, will result in a continued solid financial performance and position,” Standard & Poor’s credit analyst Horacio Aldrete said. “We also assume the city’s additional capital needs will be minimal, which should contribute to a gradual moderation of its high debt ratios.”
Highland Village’s tax base averaged 8% annual growth the past five years to almost $1.5 billion for fiscal 2008, and officials project “full development of all available land in the city to occur within the next four years,” Standard & Poor’s said.
The upgrade also applies to about $25 million of debt outstanding.
Fitch assigned a AA-minus rating to this week’s sale, and said about 87% of the village’s tax base is residential, with only a modest amount of lots available for housing construction.
Fitch said the widening of a state highway has spurred commercial development, including the two retail developments that opened in 2007.
The Texas Affordable Housing Corp. will offer $26.1 million of single-family revenue bonds at some point this week through a negotiated issue led by RBC. The debt is subject to the alternative-minimum tax.
Standard & Poor’s assigned a AA rating to the sale.