DALLAS — Continuing its regular schedule of bond sales, Dallas plans to offer about $255.7 million of general obligation debt in three tranches at some point this week.
The deal comes as many Lone Star issuers remain reluctant to enter the fray amid volatile market conditions.
Goldman, Sachs & Co. and Walton Johnson & Co. lead the underwriting syndicate for Dallas’ negotiated sale of $214.7 million of GOs, $35.5 million of equipment acquisition contractual obligations, and $5.5 million of combination tax and revenue certificates of obligation.
First Southwest Co. and Estrada Hinojosa & Co. are co-financial advisers to the city. Vinson & Elkins LLP and West & Associates LLP serve as co-bond counsel.
This is the third slice of a $1.35 billion authorization passed in November 2006. Following this week’s sale, the nation’s ninth-largest city will have nearly $700 million remaining from that bond package and about $40.2 million left from a 1998 authorization.
Prior to the first sale from the most-recent authorization, the Dallas City Council set a sales schedule of roughly $304 million each November through 2010.
Moody’s Investors Service assigned its Aa1 rating with a stable outlook to the issue. Analysts also affirmed the rating on the city’s $2.1 billion of parity debt outstanding, following the sale.
Moody’s said the city’s credit strengths include an economy that “remains stronger than nationwide average,” and “generally improved financial operations.”
“Modest financial reserves, continuing lapses in financial reporting,” and plans for “significant increases to tax-base leverage” remain mitigating credit factors, according to analysts.
Dallas’ building-permit values have increased annually since 2002 with a five-year average of “an impressive 20.1%,” Moody’s said.
For fiscal 2007, permit values rose another 20.8% to $3.4 billion, but year-to-date value for 2008 is down to about $2.9 billion. Analysts expect the city’s building and construction activity to decline in tandem with the overall national slowdown. Still, Moody’s expects continuing development along the Trinity River corridor and in the city’s southern sector to provide impetus for construction growth over the longer term.
Dallas’ fiscal 2009 tax base of $90.5 billion is up 7% from the year earlier.
Standard & Poor’s assigned a AA-plus rating to the sale and analysts said, “As a maturing city with a sound residential and commercial base, city management continues to face many challenges related to maintaining its infrastructure; but it has significant available resources to meet these challenges.”
Plano may price $180 million of GOs this week via a negotiated sale led by Morgan Keegan, but the deal has not yet been rated. Plano is rated triple-A by all three rating agencies on its GO debt. Plano officials could not be reached for comment.
The Tarrant County Cultural Education Facilities Finance Corp. plans to issue $283.8 million of revenue refunding bonds on behalf of Christus Health.
Citi is lead manager for the negotiated sale and Ponder & Co. is financial adviser to the conduit issuer.
On Thursday, the Dallas Performing Arts Cultural Facilities Board will offer $76 million of revenue bonds for the city’s downtown cultural facilities district, which includes a new opera house under construction. That deal, which was not rated as of last week, is led by Banc of America Securities.
The Fort Worth suburb of Mansfield is trying to sell two tranches of GO debt. The city plans to offer $25.3 million of water and sewer revenue bonds this week in a negotiated sale led by RBC Capital Markets and $15.5 million of GOs and combination tax and revenue certificates of obligation through a negotiated sale with Southwest Securities Inc. as lead manager.
Mansfield is just south of Arlington in the middle of the DFW metroplex and has a current population of 59,000, which is more than double the 28,031 at the 2000 Census.
Standard & Poor’s upgraded the underlying rating on the city’s utility bonds to AA-minus from A prior to the sale. Analysts said the upgrade reflects the city’s “historically strong financial position.”
The agency also assigned a AA-plus rating to the GO debt, citing the city’s favorable location within the DFW metroplex, a strong financial condition, and continued growth of the tax and employment base.