DALLAS — A variety of issues are set to price this week in the Texas municipal market, including an offering from another Dallas suburb recently receiving a credit upgrade to triple-A.

The city of Addison is bringing $34.5 million of combination tax and revenue certificates of obligation to the competitive market Tuesday on the heels of the upgrade.

Standard & Poor’s raised the underlying rating of the city to AAA from AA due to “continued healthy financial trends and strong financial management.”

First Southwest is the financial adviser. Vinson & Elkins is bond counsel.

David Medanich, vice chairman of First Southwest, said the upgrade may result in some more bids on the debt.

“They were a pretty stout credit to begin with at double-A,” Medanich said. “But the market is really looking for quality right now … so we hope the upgrade results in a few more [bids].”

Addison is located about 15 miles north of Dallas and joins Irving, Richardson, and Plano as North Texas suburbs that carry the highest credit rating. The state capital of Austin also has the gilt-edged rating on its general obligation debt.

Analysts said Addison’s “desirable location for commercial and retail businesses” also factored in the upgrade.

“We expect the town’s sound financial management practices will offset the inherent risks associated with the economic base’s concentration among commercial property, as well as the town’s relatively higher vulnerability to macroeconomic fluctuations,” said Standard & Poor’s analyst James Breeding.

Officials reported a $10.4 million general fund balance at the end of fiscal 2007. And sales tax revenue, which has increased each of the past five years, accounts for roughly 40% of general fund revenue, according to analysts.

The Lower Colorado River Authority plans to bring a two-tranche issue worth about $368 million to market this week through a negotiated sale led by Morgan Stanley.

The authority will offer $201.5 million of refunding bonds and $166.4 million of transmission-contract refunding bonds to take out commercial paper notes and fund a debt service reserve.

OBP Muni LLC is the financial adviser to the issuer and Fulbright & Jaworski LLP is bond counsel.

Moody’s Investors Service assigned its A1 rating to the refunding bonds and its A2 rating to the transmission contract debt. Both tranches received an A rating from Standard & Poor’s and an A-plus rating from Fitch Ratings.

The Pflugerville Independent School District will issue $125 million of bonds this week in a negotiated sale. The underwriting syndicate includes RBC Capital Markets, Morgan Keegan & Co., Estrada Hinojosa & Co., and Morgan Stanley.

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

The taxable assessed value of the district is up 38% to $6.67 billion for fiscal 2008 from $4.83 billion five years ago.

This week’s sale by the school district represents the entire bond package approved by voters in November. The bonds will come to market backed by the state’s triple-A rated Permanent School Fund.

Officials plan to use proceeds to build two elementary schools and one middle school, begin the planning for a fourth high school, and update technology across the district’s 26 campuses.

Chief financial officer David Andersen said the district is adding about 1,000 students a year and that could rise to 1,500 to 1,800 students, according to Andersen.

The population within the school district has climbed consistently this decade to nearly 100,000. Pflugerville’s population has benefited of late from the construction of two new state toll road projects and has more than doubled since the 2000 Census, to nearly 35,500.

Andersen said about half of the land in the school district is undeveloped, but there’s much speculation by developers on the east side now that the highways are complete or nearing completion.

The Katy Independent School District plans to offer $100 million of school building bonds this week through a negotiated sale led by Morgan Stanley. The suburban district 30 west of downtown Houston needs to build new facilities to accommodate a rapidly expanding enrollment.

The district serves a total student population of about 50,570 at 44 campuses, but officials expect total enrollment to reach 62,300 in 2010 and top 83,400 by 2015.

RBC is the financial adviser to the district, and Andrews Kurth serves as bond counsel.

Mesquite is bringing a four-tranche issue worth about $27.1 million to market at some point this week.

The suburban town just east of Dallas plans to offer $11.5 million of wastewater and sewer system revenue refunding and improvement bonds, $10.1 million of combination tax and revenue certificates of obligation, $3.4 million of public property finance contractual obligations, and $2.1 million of GO refunding bonds.

First Southwest is lead manager for the negotiated sales.

Moody’s assigned its Aa3 underlying rating to the issues and affirmed the rating on the city’s $79.2 million of parity debt outstanding.

Analysts said the rating reflects Mesquite’s “sizable and diverse tax base and healthy financial operations.” Moody’s also expects the city’s tax-base growth and the current rate of debt retirement to allow for additional debt without “significantly weakening” the debt profile.

Standard & Poor’s assigned a AA rating to the issues, citing the stable and primarily residential customer base of the water and sewer system, as well as “management’s willingness to adjust rates.” Some GO credit strengths include the growing and diverse tax base of the city and its location in the DFW metro area, according to analysts.

Mesquite’s population has been pretty steady at about 137,000 through this decade. But Standard & Poor’s reported some studies project a 16% increase in population by 2030. 

 

 

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