DALLAS — Just a handful of deals are set to price this week in Texas, including two from suburban Houston school systems.

In the largest deal of the week, the Spring Branch Independent School District plans to offer about $122.4 million of unlimited tax schoolhouse bonds in a negotiated sales led by RBC Capital Markets.

The underwriting syndicate includes Jefferies & Co., Bank of America Merrill Lynch, Morgan Keegan & Co., Southwest Securities Inc., and Wells Fargo Brokerage Services LLC.

First Southwest Co. is the financial adviser to the district. Vinson & Elkins LLP is bond counsel.

The bonds are structured as serials maturing in 2012 through 2030.

Standard & Poor’s assigned a AA rating to the bonds and Moody’s Investors Service assigned its Aa2 rating.

Analysts said the rating reflects the district’s easy access to the strong employment base of the Houston area, healthy assessed-valuation growth that offsets cost pressures, and officials’ “long-range planning and demonstrated ability to manage significant growth-related capital requirements.”

The district’s fiscal 2009 taxable-assessed value of $17.56 billion is up nearly 40% from $12.59 billion five years earlier.

This is the second sale from a $597 million bond package approved by voters in November 2007 to build two new schools, acquire 85 new buses, and replace 12 aging schools that were built between 1938 and 1967. The district serves about 32,400 students on 46 campuses about 10 miles west of downtown Houston.

Standard & Poor’s said management reported a $71.3 million unreserved general fund balance for fiscal 2008, representing “a very strong 28.6% of operating expenditures,” despite a $2 million draw down.

Moody’s also affirmed the Aa2 rating on $519 million of debt outstanding. Analysts said the rating reflects the district’s “large tax base, favorable socioeconomic profile, historically stable financial operations facing near term operating pressures, and elevated debt burdens with plans for additional borrowing.”

The Humble Independent School District is bringing $70.3 million of schoolbuilding bonds to market this week through a negotiated sales led by Citi.

Voters passed a $245 million bond package in May 2008 for three new campuses, land acquisition for future sites, 100 new buses, a district police station, surveillance cameras at all elementary schools, and numerous other general maintenance upgrades.

The district currently serves a total enrollment of about 33,000 and is adding more than 1,500 students a year. Projections show the enrollment topping 40,600 in 2012 and reaching 48,600 by 2017.

Standard & Poor’s assigned a AA-minus rating to the Humble bonds, citing participation in the Houston-area economy, strong reserve levels, and a sizable tax base with consistently solid growth.

The taxable-assessed value of Humble ISD, which is about 20 miles northeast of downtown Houston, averaged 9% annual growth the the past five years to about $10.5 billion for fiscal 2008, according to analysts.

Hidalgo County is issuing $12.1 million of certificates of obligation in two series at some point this week. The far South Texas county will use proceeds to fund drainage system improvements.

Fitch Ratings assigned an A-plus rating to the sale. Moody’s assigned its A1 rating and Standard & Poor’s assigned a AA-minus rating.

Analysts said the ratings reflect the county’s rapidly growing economy that benefits from trade with Mexico, an expanding and diverse property-tax base, and maintenance of strong reserves.

Moody’s affirmed its rating on $169.5 million of parity debt outstanding.

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.