DALLAS — A much-anticipated sale by the North Texas Tollway Authority and a much-needed issue for the Houston Independent School District top this week’s schedule in the Lone Star state’s municipal debt market.

The NTTA plans to offer about $2.3 billion of system revenue refunding bonds Thursday for the controversial State Highway 121 tollway project north of Dallas. The bonds will take out bond anticipation notes the NTTA sold last year.

Bear, Stearns & Co. leads the underwriting syndicate for the negotiated sale and RBC Capital Markets is the financial adviser to the authority.

Last week, Fitch Ratings downgraded its rating on the NTTA to BBB-plus from A-minus and then promptly withdrew the rating. The authority has said the Fitch downgrade, which applies only to outstanding debt, “doesn’t really mean anything” to this week’s sale, which comes to market with underlying ratings of A-minus from Standard & Poor’s and A2 from Moody’s Investors Service.

In mid-February, Standard & Poor’s lowered its rating to A-minus from A due to “the significant additional debt that the authority is incurring, the likelihood of additional debt-financed projects, and an increased reliance on higher growth levels to support good senior-lien projected debt service coverage under moderate downside stress scenarios.”

Some of the bonds are expected to be insured.

Meanwhile, Texas’ largest school district is finally bringing the first tranche of debt to market from an $805 million authorization passed in November.

Last week, the Texas attorney general’s office ruled the Houston authorization valid, freeing officials to proceed with the sale, which had been held up by lawsuits claiming the bond package doesn’t address critical needs in some of the district’s predominately black neighborhoods.

HISD plans to offer $385.4 million of limited-tax schoolhouse bonds through negotiation with Merrill Lynch & Co., Ramirez & Co., and Rice Financial Products Co.

First Southwest Co. and Estrada Hinojosa & Co. are the co-financial advisers to the district, which serves more than 200,000 students in the nation’s fourth-largest city. Andrews Kurth LLP and Burney & Foreman serve as co-bond counsel.

Standard & Poor’s recently upgraded its underlying rating on the Houston school system to AA-plus from AA, citing “continued property tax base expansion and a consistent trend of positive operating results that has nearly doubled reserves over the past five years.”

Since the end of fiscal 2004, the taxable assessed value of Houston district increased more than 36% to $96.82 billion.

The upgrade makes HISD just the second school district in Texas to attain the double-A plus rating. While there are no triple-A school systems in Texas, most of the school bond sales qualify for the triple-A enhancement provided by state’s Permanent School Fund. The HISD debt will come to market with the PSF backing, and the district has roughly $3 billion of debt outstanding.

A handful of other school districts also plan to issue bonds backed by the PSF this week.

In the competitive market Wednesday, Galena Park Independent School District will offer $18 million of unlimited-tax school building bonds and Hudson Independent School District expects to sell $9.5 million of similar debt.

Southwest Securities Inc. is the financial adviser to the Galena Park ISD, which is located about 11 miles east of downtown Houston. Andrews Kurth is bond counsel.

Coastal Securities Corp. is the financial adviser to the Hudson ISD, which is in Lufkin in East Texas. Vinson & Elkins is bond counsel.

RBC Capital Markets is the lead manager for two other school districts bringing GO bonds to market this week. Celina Independent School District plans to issue just under $10 million and Comal Independent School District will offer about $6.5 million.

Comal ISD is about 30 miles northeast of San Antonio. The district has added about 1,000 new students each of the past five years and that trend is expected to continue. SAMCO Capital Markets is the financial adviser and Fulbright & Jaworski LLP serves as bond counsel to the district.

Celina is about 45 miles north of Dallas. The school district serves 1,700 students in four schools.

The Friendswood Independent School District plans to issue about $99.5 million of unlimited-tax schoolhouse bonds through a negotiated sale at some point this week.

UBS Securities LLC is lead underwriter and First Southwest is the financial adviser to the district.

While initially on the schedule for this week, the sale was moved up to late last week due to the large volume in the market this week. But officials then decided to pull it back and try again this week after the market swung the wrong way Thursday.

“Our financial adviser told us non-taxables were selling higher than taxables, which he felt was a bit of an anomaly. But we still decided to hold off for now, as our PSF approval is still hanging in there and we have some time to get it done,” said assistant superintendent George Rodgers.

Texas school districts have a 120-day window to issue debt after receiving approval for the PSF guarantee from the Texas Education Agency.

San Marcos is bringing a four-tranche issue worth $73.3 million to market this week, possibly Tuesday.

The city, which is nearly midway between San Antonio and Austin, plans to offer $42.6 million of pass-through toll revenue and limited-tax bonds, $4.8 million of GO bonds, $12 million of combination tax and revenue certificates of obligation, and $13.9 million of waterworks and wastewater revenue bonds in negotiated sales led by Wachovia Bank NA. First Southwest is the city’s financial adviser.

Standard & Poor’s upgraded its rating on the GO and water and sewer debt to AA-minus from A-plus ahead of the sales. Moody’s raised its rating on the water and sewer debt to A1 from A2, citing “solid financial trends, resulting largely from multi-year rate increases that have improved debt service coverage and the system’s reserves.”

“We’re very excited about the upgrades, as we’ve been working on getting our information-management system improved and the upgrade shows we’re working in the right direction,” finance director Rosie Vela said.

She said the market’s current volatility is something she’s never seen in her 23 years in the Texas municipal market, adding that some facets of the deal may get held up until summer or later.

“Under normal circumstances I could give you a definite sale date, but there are no normal circumstances in today’s market,” Vela said. “We have a number of projects that need to get done one way or the other. We’ve been very careful with our finances and have some cash available that we may have to tap to get some water and sewer projects done, but some may have to wait until the market gets back to a level of normalcy. But if they’re delayed we get hurt with inflation.”

Vela said the pass-through toll bonds are important to the city to allow for construction of a new road that skirts downtown. Currently, the only road west goes right through downtown past the courthouse, and “that’s not the most efficient traffic pattern.”

Vela said the debt will be insured by Financial Security Assurance Inc.

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