DALLAS — Limited new-issue supply will be offered in Texas this holiday-shortened week. The markets are closed Friday for the July 4 holiday.
In the largest issue of the week, San Jacinto Community College District, plans to offer $150 million of unlimited tax bonds in a negotiated sale with Coastal Securities Inc. as lead manager.
The underwriting syndicate includes Estrada Hinojosa & Co., Fidelity Capital Markets, Southwest Securities Inc., and Wells Fargo Brokerage Services LLC.
RBC Capital Markets is the district’s financial adviser and Vinson & Elkins LLP is bond counsel.
This sale is the second tranche of a $295 million bond package overwhelmingly approved last year. The Houston-area community college will use proceeds to upgrade and expand three allied-health facilities among other projects.
The bonds are structured as serials maturing in 2011 through 2039. A decision on bond insurance will be made just before pricing, which may be as soon as today, according to David Tiffin, vice president at RBC Capital Markets.
Standard & Poor’s assigned an AA rating to the sale. Analysts said the district’s credit strengths include participation in the Houston metropolitan area, a low tax rate, and sound financial position.
The district’s taxable-assessed value rose 37% since fiscal 2006 to $39 billion for fiscal 2009, although officials project a 2% decline for next year, according to Standard & Poor’s.
Moody’s Investors Service assigned its Aa3 rating to the issue, citing the district’s tax-base composition, increased student enrollment, and strong financial performance.
The student population in the fall of 2008 was about 25,600, which is 13.3% higher than five years earlier.
Elsewhere, two West Texas issuers are bringing general obligation debt sales to market Tuesday.
Randall County will offer $11.3 million of combination tax and revenue certificates of obligation through a negotiated issue with First Southwest Co. and Estrada Hinojosa as co-managers.
Southwest Securities is the financial adviser to the Texas panhandle county. Fulbright & Jaworski LLP is bond counsel.
The certificates are structured as serials maturing in 2010 through 2029. Insurance will be at the bidder’s option.
Proceeds will fund renovations to the county’s finance building, courthouse, and jail facilities. Officials anticipate coming back to market later this year with another $9 million of certificates for additions to a youth center and further upgrades to the courthouse.
Standard & Poor’s assigned a AA rating to the issue, citing the county’s “sustained property tax base growth and diversification, consistently sound financial performance and position, and low overall debt burden” as credit strengths.
Analysts said the county’s tax base averaged 7.2% annual growth the past five years to $6.9 billion for fiscal 2009. The county’s current population of about 114,275 is up 9.6% from 104,312 at the 2000 Census, which is an increase of 16% from 10 years earlier.
Moody’s assigned a Aa3 rating to the deal.
The Culberson County Hospital District plans to offer $6.8 million of limited tax bonds in the competitive market.
RBC Capital Markets and Skiles Co. are co-financial advisers to the district, which operates a 25-bed hospital in Van Horn to serve the sparsely populated county about 120 miles east of El Paso. Fulbright & Jaworski is bond counsel.
Proceeds will fund construction of a new hospital, which will be attached to the existing facility that will be converted to provide indigent care and house the district’s administrative offices.
The bonds were approved by 85% of county residents in May 2008, according to Fitch Ratings, which assigned a BBB-minus rating to the issue.
Analysts said the rating reflects the hospital’s “critical access designation,” current operating profitability, and the district’s strong taxpayer support, concentrated tax base, and small service area.
The hospital serves a population of roughly 2,500 and the closest hospital is in Pecos about 85 miles away, according to Fitch.