DALLAS — Continued volatility in the municipal market appears to be keeping some issuers on the sidelines in Texas as this week’s docket has only a handful of new debt issues.
"I don’t really have an answer to why it’s so light," one trader here in Dallas said. "There’s just very little out there."
In the largest issue on the schedule, the Harris County Health Facilities Development Corp. may price $230.1 million of thermal-utility revenue bonds on behalf of the TECO project.
RBC Capital Markets is lead manager for the negotiated sale with JPMorgan, Merrill Lynch & Co., and Siebert Brandford Shank & Co. as co-managers.
First Southwest Co. is the financial adviser to the conduit issuer.
Proceeds will be loaned to the Texas Medical Center Central Heating and Cooling Services Corp. The nonprofit owns and operates two thermal-utility plants and distribution systems that provide chilled water for cooling and steam for heating to the Texas Medical Center in Houston.
TECO plans to use bonds proceeds for expansion and upgrades to the plants and distribution system.
Standard & Poor’s assigned a AA-minus rating to the sale and Moody’s Investors Service assigned its Aa3 underlying rating.
Friendswood Independent School District is on the schedule once again this week with $99.5 million of unlimited-tax schoolhouse bonds. The sale, which has been on and off for a few weeks as officials try to time the market, exhausts the entire authorization approved by voters in November.
UBS Securities LLC is lead manager for the negotiated sale. The underwriting syndicate includes RBC Capital Markets, Southwest Securities Inc., Edward Jones, Wachovia Bank NA, and Coastal Securities Inc.
First Southwest is the financial adviser to the district and Vinson & Elkins LLP serves as bond counsel.
The bonds come to market following an upgrade of the underlying credit of the suburban district about 23 miles south of downtown Houston to A-plus from A from Standard & Poor’s.
Analysts said the upgrade reflects the district’s "significantly improved financial position and steady property tax base growth." The higher rating also applies to about $22 million of debt outstanding.
Friendswood ISD’s primarily residential tax base averaged 10% annual growth the past five years to $1.96 billion for fiscal 2008, according to analysts, who expect the assessed value to continue to grow at a similar pace.
Moody’s assigned its A1 underlying rating to the sale, and Fitch Ratings doesn’t rate the credit.
The bonds come to market with the triple-A wrap provided by the state’s Permanent School Fund.
La Porte Independent School District plans to offer $65 million of unlimited-tax school building bonds this week through a negotiated sale also led by UBS. First Southwest, Morgan Keegan & Co., and Bank of America Securities are co-managers.
RBC is the financial adviser to the district on the Galveston Bay about 25 miles southeast of Houston. Vinson & Elkins LLP serves as bond counsel.
Enrollment at the district’s schools has been relatively steady the past decade or so, between 7,400 and 7,900 students. But officials project a student population between 8,700 and 9,700 by 2011.
Moody’s assigned its Aa3 rating to the sale, citing the district’s large and highly industrial tax base.
The bonds will not be backed by the state’s PSF enhancement due to the level of debt per student exceeding the maximum under the program, according to analysts.
Standard & Poor’s assigned a AA underlying rating to the sale and affirmed the rating on the district’s roughly $173 million of debt outstanding, including this week’s issue.
The school district’s assessed valuation averaged 4.6% growth annually the past five years to $5.3 billion for fiscal 2007, despite the "cyclical pattern consistent with a petro-chemical dominated tax base," according to Moody’s.
In the only competitive sale on this week’s schedule, Nacogdoches plans to offer $5.4 million of waterworks and sewer system bonds Tuesday.
Southwest Securities Inc. is the financial adviser to the East Texas city. Fulbright & Jaworski is bond counsel.
The city plans to use proceeds to replace water meters with an automated meter-reading system.
