DALLAS — The Fort Worth Independent School District’s $185.2 million issue leads the way this week in Texas, as a handful of district’s bring bonds to market once again without the backing of the state’s triple-A rated Permanent School Fund.

The state suspended the bond-guarantee program because of the declining value of the fund over the past year or so, and it won’t be available until September at the earliest.

The North Texas district plans to offer about $182.8 million of new money unlimited tax school building bonds and $2.35 million of refunding bonds Tuesday.

RBC Capital Markets is lead manager for the sale with Estrada Hinojosa & Co. and Siebert Brandford Shank & Co. as co-managers. JPMorgan and Jefferies & Co. round out the underwriting syndicate.

First Southwest Co. is the district’s financial advisers and Kelly Hart & Hallman LLP is bond counsel.

A decision on insurance for the bonds, which are structured as serials maturing next year through 2029, will be made just prior to pricing.

The district carries underlying ratings of AA from Standard & Poor’s and Aa2 from Moody’s Investors Service.

Many deals on tap for this week come from highly rated issuers, as the flight to quality in the market continues.

The triple-A rated Dallas suburb of Richardson is bringing $11.8 million of combination tax and revenue certificates of obligation to market this week in a negotiated sale led by Stifel, Nicolaus & Co. and RBC Capital Markets.

First Southwest is the financial adviser to the city and Fulbright & Jaworski LLP is bond counsel.

Standard & Poor’s upgraded the North Texas town to AAA last year due to its strong reserves, and analysts assigned the gilt-edged rating to this week’s sale.

Moody’s rates the credit at Aa1 on the strength of the city’s “sizable, affluent tax base that derives its value in almost equal proportions between residential and commercial/industrial properties, strong financial management, and manageable debt position.”

Director of finance Kent Pfeil said the sale is part of the city’s normal funding plans and proceeds will fund water and sewer upgrades, acquisition of some new fire trucks, and part of a fiber-optic project in conjunction with the school district.

Pfeil said the city refunded about $20.6 million of GO bonds late last week and was “very excited and extremely happy with the results.”

The refunding resulted in a true-interest cost of 2.63% for the city with net present-value savings of 9.78%.

Georgetown plans to offer about $10 million in two tranches at some point this week on the heels of an upgrade to AA-plus from Standard & Poor’s.

The growing suburb, which is 30 miles north of Austin, will issue $5.6 million of combination tax and revenue certificates of obligation in a negotiated sale led by Raymond James & Co. and nearly $4.4 million of general obligation refunding bonds with SAMCO Capital Markets as senior manager.

Specialized Public Finance Corp. is financial adviser to the city.

Analysts said the upgrade reflects the city’s “continued economic growth and diversification” and applies to about $98 million of debt outstanding

Fitch Ratings assigned a AA rating and stable outlook to the bonds. Analysts said the city’s credit strengths include a “growing tax base, modest debt burden with a manageable capital improvement plan, strong financial operations reflective of prudent fiscal management, and comprehensive operating policies.”

The city carries underlying ratings of Aa3 from Moody’s.

The Edinburg Consolidated Independent School District expects to price $3.1 million of refunding bonds at some point this week.

Estrada Hinojosa & Co. is the financial adviser to the South Texas district and Ramirez & Guerrero LLP serves as bond counsel.

Last September, the district sold $111.9 million of school building bonds, exhausting the entire bond package approved by voters the previous May for six new campuses, conversion of a middle school to a high school, three multi-purpose fine arts centers, land acquisitions for more schools, and renovations to existing facilities.

Fitch assigned an A rating with a positive outlook to this week’s sale and affirmed the rating on the district’s $227 million of unlimited tax bonds outstanding and $21 million of maintenance tax notes outstanding. Analysts said the rating reflects an expanding tax base with moderate debt that’s substantially supported by the state.

Other positive credit trends include the district’s “healthy financial condition despite enrollment growth pressures and capacity constraints.”

The outlook change to positive reflects an “expanding and diversifying economy, solid voter confidence, and additional maintenance tax capacity created by the refunding of the district’s lease revenue bonds with voter-approved general obligation bonds,” according to Fitch.

Moody’s rates the district’s credit at A2 and Standard & Poor’s rates the Edinburg CISD at A underlying.

The district’s enrollment has been growing by nearly 4% annually of late and is nearly 30,000 now with many facilities operating at overcapacity. About 5,000 students, which is the equivalent of about six elementary schools, currently attend class in 179 portable classrooms.

Officials project yearly enrollment gains of 4.5% for the next few years, eventually pushing the total student population to almost 46,000 by 2016.

The Klein Independent School District expects to price $62.4 million of schoolhouse and refunding bonds at some point this week through a negotiated sale led by First Southwest.

RBC is the financial adviser to the district. Vinson & Elkins LLP and Bates & Coleman PC are co-bond counsel to the district, which is about 23 miles north of downtown Houston.

Officials project the enrollment of 42,730 to reach 60,000 by 2016 and last May, voters approved a $647 million bond package for new schools.

The district carries underlying ratings of Aa2 from Moody’s and AA from Standard & Poor’s.

 

 

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.