DALLAS — This week’s Texas deals feature an educational theme, as public schools and universities move to the head of the class.

Three university systems and a community college district will market bonds, led by the Texas State University System’s $222 million that includes a refunding, along with new-money for construction on the flagship campus in San Marcos, as well as Sam Houston State University in Huntsville and the TSU North Austin campus.

Lehman Brothers is lead manager on the deal, with RBC Capital Markets, Estrada Hinojosa & Co., and Piper Jaffray & Co. as co-managers. First Southwest Co. serves as financial adviser. McCall, Parkhurst & Horton acts as bond counsel.

The bonds are rated AA-minus by Standard & Poor’s and Fitch Ratings, with a Aa3 from Moody’s Investors Service.

TSU has outstanding debt of $550 million.

Standard & Poor’s noted in a report last year that the loss of Angelo State University in San Angelo to the Texas Tech University System could affect the rating in the future.

The Texas A&M University System Board of Regents is planning a $65 million competitive sale of Permanent University Fund flexible rate notes on Monday with JPMorgan as remarketing agent and First Southwest as financial adviser. The University of Texas Investment Management Co., which handles PUF investments, serves as liquidity provider.

Austin Community College District is selling $120 million of lease revenue bonds for its Round Rock campus in a deal led by Wachovia Bank. Co-managers include Estrada Hinojosa, Cabrera Capital Markets, First Southwest and RBC Capital Markets. The bonds carry ratings of AA from Standard & Poor’s and Aa3 from Moody’s. Fitch Ratings does not rate the debt.

Texas Woman’s University will issue $22 million of revenue financing system bonds to renovate the Science building on the Denton campus, about 30 miles north of Dallas.

The negotiated deal is led by Piper Jaffray & Co. with Morgan Keegan and Estrada Hinojosa as co-managers.

The junior lien bonds secured by tuition, fees, interest and other income, won an upgrade from Moody’s from A2 to A1, with Standard & Poor’s maintaining an A rating. Fitch Ratings does not rate the issue.

The university system has applied for insurance on the bonds. About 66% of TWU’s outstanding debt is junior-lien bonds. The university created its revenue financing system with the issuance of a 2004 series of junior-lien bonds.

Other large issuers include the North Harris County Regional Water Authority, which is issuing $200 million of senior lien bonds with First Southwest Co. as senior manager.

Public school districts continue their parade to Wall Street this week as they compete for the remaining capacity of the Texas Permanent School Fund that guarantees a triple-A rating. The districts must make their first debt-service payment by Aug. 15 to qualify for debt assistance from the Texas Education Agency, which serves as gatekeeper to the PSF.

“PSF is very attractive at this time because of all the problems with the insurance industry,” said Ronald Caloss, senior vice president at Morgan Keegan in Dallas.

Klein Independent School District in northwest Harris County tops the school issuers with $191 million of unlimited schoolhouse and refunding bonds, Series 2008-A. Underwriters on the negotiated deal are led by First Southwest Co., with Morgan Keegan & Co, Morgan Stanley, Southwest Securities, DEPFA First Albany, Ramirez & Co. and Raymond James as co-managers.

RBC Capital Markets serves as Klein’s financial adviser. Vinson & Elkins serves as bond counsel, with Bates & Coleman as co-counsel.

Backed by the PSF, the bonds carry triple-A ratings.

Proceeds of the bonds will be used for construction and purchase of new school facilities, buses and refunding of bonds.

With an enrollment of 42,730, Klein ISD northwest of Houston grew at 3.5% last year, about half the rate of the previous year.

This week’s issue is the first from $646.9 million approved by voters on May 10.

On the competitive calendar, Burleson Independent School District south of Fort Worth will sell $83 million of unlimited tax school building bonds at 11:30 a.m. local time with Southwest Securities as financial adviser.

The bonds, which carry PSF backing for a triple-A rating, mature from 2010 to 2038. The average life of the bonds is just under 25 years.

Bond counsel on the deal is McCall Parkhurst of Dallas.

Proceeds of the bond sale will be used to build, renovate and equip school facilities. With an estimated population of 49,000, Burleson ISD covers 55 square miles with a tax base of $2.5 billion. With the upcoming issue, the district will carry a total debt load of $230.5 million, with $32.3 million of overlapping debt from other jurisdictions.

Other negotiated deals include Livingston ISD’s $53.5 million of general obligation bonds through RBC Capital Markets and Spring Hill ISD’s $28 million through First Southwest.

Nederland ISD will sell $4.5 million of GO bonds competitively on Monday with Coastal Securities serving as financial adviser.


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