DALLAS — Two growing suburbs in the Dallas-Fort Worth metroplex hope to price multi-tranche debt sales this week, while two Harris County issuers expect to bring much larger refunding bonds to market.
Volume as been light in Texas the past few weeks, as the volatile market has kept many issuers on the sidelines.
Grand Prairie plans to price roughly $41.5 million of bonds today.
The city will offer $26.7 million of tax and revenue certificates of obligation, nearly $9 million of general obligation bonds, and $4.9 million of water and wastewater revenue system bonds through negotiated sales led by RBC Capital Markets. Stifel, Nicolaus & Co. Inc., and Coastal Securities Inc. are co-managers. First Southwest Co. is financial adviser to the city. Fulbright & Jaworski LLP serves as bond counsel.
Chief financial officer Diana Ortiz said “now that liquidity’s come back a bit, we expect to see some demand for the debt … plus we’re a double-A plus.”
Standard & Poor’s assigned a AA-plus rating with a stable outlook to the issue. Analysts said the city’s “financial condition remains a strength.”
The unreserved, undesignated general-fund balance of $25.4 million for fiscal 2007 “was in our opinion a very strong 31% of operating expenditure,” Standard & Poor’s said. The current general-fund balance is up 59% from $16 million in 2003.
Fitch Ratings assigned an AA rating to the all the debt and revised its outlook on the GO bonds to positive from stable due to the increased diversification of the city’s tax and employment base.
Analysts also affirmed the AA rating on $95 million of GO bonds outstanding and $98 million of outstanding COs. Fitch rates the city’s sales-tax revenue debt at AA-minus.
Analysts said the ratings take “into consideration that anticipated population growth will continue to pressure operations and require further investment in capital infrastructure, although this is somewhat mitigated by the city’s demonstrated ability to effectively promote growth and address associated service demands.”
Grand Prairie’s current population of 166,650 is up nearly 18% from five years ago, and the city’s fiscal 2008 taxable-assessed value of $9.76 billion represents an increase of 43.5% from nearly $6.8 billion in 2004.
In May 2007, Grand Prairie voters approved an $80 million bond package to build a minor league baseball stadium, a new public-safety hub, and a senior center. The ballpark opened this spring and is between the Lone Star Park horse-racing track and Nokia Theatre, creating a huge entertainment complex just west of downtown Dallas.
In 1992, voters approved a half-cent sales-tax increase to finance construction of the horse-racing facility. Significant population growth resulted in higher-than-expected sales-tax revenue that enabled the city to pay off the Series 1995 bonds used to build the park earlier last year. Officials chose to reuse that allocation to provide the debt service on the bonds approved in May 2007.
Meanwhile, Mansfield expects to price $25.3 million of water and sewer revenue bonds this week in a negotiated sale led by RBC, as well as $15.5 million of GO bonds and combination tax and revenue certificates of obligation through a negotiated sale with Southwest Securities Inc. as lead manager.
Mansfield’s currect estimated population of 59,000 is more than double the 28,031 at the 2000 census. The formerly rural area, which is south of Arlington in the middle of the metroplex, was just a small town back in 1980, home to about 8,100 people.
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.
The Harris County Flood Control District may get $160 million of refunding bonds to market at some point this week, while Harris County Health Facilities Development Corp. plans to issue about $228.4 million of hospital revenue refunding bonds.
Citi and Siebert Brandford Shank & Co. will lead the syndicate for the flood-control district sale, which takes out some variable-rate demand bonds issued earlier this year with a swap agreement. The bonds are secured by a property tax pledge of the county, which includes Houston and is the third-largest in the country with roughly 3.9 million residents.
Standard & Poor’s assigned a triple-A rating to the issue, citing the county’s large and continually diversifying economic and property-tax bases, strong financial management and reserves, and low direct-debt levels.
RBC Capital Markets is lead manager for the HFDC sale, which is on behalf of the Memorial Hermann Healthcare System in Houston.
Royal Independent School District hopes to get nearly $20 million of school building bonds sold this week. Southwest Securities is lead underwriter. The bonds will be backed by the state’s triple-A rated Permanent School Fund.
The district serves about 2,000 students in four schools about 30 miles west of downtown Houston.
Officials project double-digit enrollment growth for the next few years, as the Houston suburbs continue to expand.