DALLAS — The Bushland Independent School District is bringing $9.1 million of unlimited-tax school building bonds to market next week on the heels of a three-notch upgrade to A-plus from BBB-plus by Standard & Poor’s.

Morgan Keegan & Co. and Raymond James & Associates Inc. are co-managers for the negotiated sale set to price Wednesday. First Southwest Co. is the financial adviser to the West Texas district that is near Amarillo in the panhandle. Underwood Law Firm LLP is bond counsel.

The district’s continued property-tax base expansion and maintenance of strong reserves led to the three-notch boost to the A category, according to Standard & Poor’s. The higher rating applies to about $23.8 million of debt outstanding. Analysts said a recent change in how the agency views small issuers also factored in the upgrade.

Earlier this year, Standard & Poor’s said it used to constrain the ratings on issuers such as Bushland ISD because of their location and smaller tax and population bases but now the significance of those factors has lessened in the agency’s analysis.

Neither Fitch Ratings nor Moody’s Investors Service rates the Bushland district’s credit.

Upgrades indicate the credit quality of an issuer is improving, often lead to lower costs of borrowing, and may negate the need for bond insurance.

George Williford, senior vice president at First Southwest, said a decision on insurance for the bonds — which are structured as serials maturing in 2010 and 2013 through 2034 and with some capital-appreciation bonds maturing in 2011 and 2012 — will be made just before pricing.

“We’re certainly pleased with the rating, especially with the lack of the [Permanent School Fund], which has made the underlying rating that much more important,” he said. “And the market has been favorable on several recent deals we’ve been a part of for district’s in the A category even when uninsured.”

The PSF, the state’s triple-A rated school bond guarantee program, has been suspended since March, as officials await a ruling from the Internal Revenue Service in regard to the fund’s capacity to back debt.

Bushland ISD’s estimated 2010 population of 7,730 is a 28% increase from five years earlier and at $836.6 million, the current taxable-assessed value of the district is up 26.2% from 2006.

Total enrollment at the district’s three campuses is about 1,100 students. Proceeds from the bonds will fund additions to the high school, acquisition of portable buildings at the elementary and middle school campuses, a new cafeteria for the middle school, and street improvements around the schools.

Business manager Karen Grantham said the district’s growth reflects suburban sprawl spilling from Amarillo.

“We’re not out in the country, but we are about seven miles west of the city, and we have a good jobs environment with the large government companies in the area,” she said. “So our district is becoming more appealing for folks that are looking for bigger lots and a better school district.”

Bell Helicopter Textron Inc. has a plant on the east side of Amarillo. And the B&W Pantex plant, which maintains “the safety, security and reliability of the nation’s nuclear weapons stockpile” for the Department of Energy and National Nuclear Security Administration, is about 17 miles northeast of Amarillo.

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