DALLAS — New Texas issues will be sparse the first week of February, as higher education and a state general obligation bond issue add some heft to the calendar.
The week opens with six competitive deals worth a mere $25 million on the Thomson Municipal Market calendar, slightly more than a third of last week’s offerings.
Nine negotiated deals worth $468 million barely surpasses last week’s eight deals for $466 million. After a comparatively brisk two weeks following a dead December, activity appears to be slacking again.
With the Texas Permanent School Fund’s ability to back public school debt frozen due to capacity constraints and bond insurance in short supply, issuers who fall below the double-A credit rating have a tough time marketing bonds affordably, industry experts say.
No deal on this week’s negotiated calendar is rated lower than A.
The top deal this week is the Texas Tech University System’s $174 million of refunding and improvement bonds with ratings of AA from Standard & Poor’s and Fitch Ratings and Aa3 from Moody’s Investors Service.
The underwriting team is led by RBC Capital Markets and JPMorgan, with Citi, Estrada Hinojosa & Co., Frost Bank and Morgan Keegan & Co. as co-managers.
First Southwest Co. serves as financial adviser, with Fulbright & Jaworski as bond counsel.
About $74 million of Tech’s issue is new money to fund construction on the university’s flagship Lubbock campus and at the satellite Angelo State University in San Angelo. Proceeds will also be used to refund about $51.9 million of commercial paper and provide $47.8 million of refunding debt for Tech and ASU.
Another higher-education deal will be coming from Texas Woman’s University, based in Denton. The $21 million of system revenue bonds will be sold through negotiation with Morgan Keegan & Co. and its co-managers Estrada Hinojosa and Piper Jaffray. Those bonds carry ratings of A from Standard & Poor’s and A1 from Moody’s. Proceeds will build a new health sciences center in Dallas.
The other large deal this week will be the state’s $153 million of general obligation bonds for the Water Infrastructure Fund, a loan pool for local water utilities developing new projects or undertaking conservation or maintenance of existing systems.
The pricing will begin with a retail order period Monday, followed by institutional orders Tuesday, said Nancy Banks Marstiller, development fund manager for the Texas Water Development Board.
The bonds, with serials maturing through 2029 carry ratings of AA from Standard & Poor’s, Aa1 from Moody’s Investors Service and AA-plus from Fitch Ratings.
The negotiated deal is led by Morgan Stanley with eight co-managers. First Southwest Co. is financial adviser.
The bonds are the first of the year from the Texas Water Development Board, one of the state’s largest purveyors of general obligation debt, and the second issue under the Water Infrastructure Fund.
The bonds come from $450 million authorized by the Texas Legislature in its 2007 session for the Water Infrastructure Fund that provides low-interest loans for local governments. Last May, the TWDB sold $113 million of bonds for the fund.
The board may issue another $183 million of bonds for the program in May or June, Marstiller said.