DALLAS — The Frisco Independent School District may test the bond market’s troubled waters this week with a $136.2 million deal.

Voters in the rapidly growing city of Frisco, 20 miles north of Dallas, overwhelmingly approved a $798 million bond package in May 2006, which is the third-largest ever passed by a Texas school system and biggest ever by a suburban district.

Despite the fact that only a few issues have sold in Texas in recent weeks, officials hope to get the second tranche of debt from the authorization sold this week, a negotiated issue of $136.2 million of school building bonds and refunding bonds.

Assistant superintendent for facilities and finance Richard Wilkinson said about $30 million of the issue is a refunding.

“It’s a negotiated sale so we could pull it, if we need to,” he said. “But delaying it a month or two may not help us any, and unless it’s just really awful or the news somehow gets worse, I expect us to do all we can to get these bonds sold, as we need to build new schools in a timely fashion for our kids.”

The district’s building schedule calls for 19 new campuses, including 10 elementary schools, six middle schools, and three high schools, to accommodate a student population that’s expected to triple in the next decade to close to 60,000.

Officials anticipate another 5,000 children enrolling each of the next two school years, pushing the student population to roughly 37,500. A decade ago, the district served about 3,750 students. This year’s enrollment is nearly 27,500 in the district’s 38 schools.

Morgan Stanley is lead manager for the upcoming sale, and the bonds will come to market backed by the state’s triple-A rated Permanent School Fund.

Southwest Securities Inc. is the district’s financial adviser and McCall, Parkhurst & Horton LLP serves as bond counsel.

Frisco ISD carries underlying ratings of Aa3 from Moody’s Investors Service and A from Fitch Ratings, which also affirmed the rating on the district’s $939 million of parity debt outstanding.

The taxable assessed valuation within the school district has climbed to $14.92 billion for fiscal 2007 from about $2.62 billion at the start of the decade.

Officials expect to open the district’s fifth and sixth high schools in August 2009.

The city of Frisco’s population has more than tripled since the 2000 Census figure of 33,714, and now stands at more than 100,000. Officials estimate the population will be nearly 125,000 by 2010 and reach 275,000 in 2020.

The Coppell Independent School District wanted to get $14.7 million of tax and revenue notes sold last week through a negotiated sale led by Morgan Keegan & Co. with Piper Jaffray & Co. and First Public LLC as co-managers.

But that issue was delayed and it’s unclear when it may get sold.

The city of Coppell also has been trying to issue new-money debt for a few weeks to no avail.

About a month ago, Standard & Poor’s raised the city’s credit two notches to AAA from AA, ahead of the planned issuance of $26.5 million of certificates of obligation in two tranches.

Analysts said the upgrade reflects “very strong wealth and income levels and management’s maintenance of strong reserves that will likely allow the city to maintain its elevated financial condition even in the event of fiscal stresses.”

Coppell is roughly 20 miles northwest of downtown Dallas and 30 miles northeast of downtown Fort Worth, just north of DFW airport. The city’s estimated 2007 population of nearly 40,000 is 11% higher than the 2000 Census figure of 35,958.

City officials managed to achieve operating surpluses the past six years, despite “growth pressures and an elevated debt-service-carrying charge,” according to Standard & Poor’s. Coppell’s fiscal 2007 taxable-assessed value of about $4.25 billion is up nearly 21% from five years earlier.

First Southwest is the financial adviser to the city and McCall, Parkhurst & Horton is bond counsel.

In August 2007, Moody’s upgraded its rating on the city to Aa2 from Aa3 due to a sizable tax base that’s “experiencing solid commercial growth and is attracting individuals with high-wealth levels.”

Of the few deals priced last week, Fort Bend County Municipal Utility District No. 129 sold nearly $5.3 million of unlimited-tax bonds through a competitive issue won by First Southwest, which provided the only bid and is also the financial adviser to the Houston-area utility.

The sale resulted in a net-interest cost of 6.2512% for the issuer.

Yields on the bonds, which are unrated, range from 4% with a 4.5% coupon for bonds due next year to 6.25% at par for those maturing in 2034. The bonds due after 2018 are callable at par in 2017.

This week in the competitive market, the Cinco Southwest Municipal Utility District No. 1 plans to offer nearly $17 million of contract revenue bonds Tuesday, while Acton Municipal Utility District continues to try and get $6 million of revenue bonds to market.

First Southwest is the financial adviser to the Cinco Southwest district, which is outside Houston, and Southwest Securities advises the Acton utility, which is in Hood County just south of Tarrant County and Fort Worth.

Standard & Poor’s upgraded the underlying credit of the Acton MUD to A-plus from A ahead of the sale, citing “the district’s proactive management and solid finances.”

Analysts said the once rural area is developing into “an affluent suburban bedroom community,” serving the Fort Worth metropolitan area. Analysts said “second homes and even high-end primary homes in, and around, Lake Granbury continue to proliferate within the district.”



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