DALLAS — Two large deals that include Build America Bonds are coming to market this week in Texas.

The North Texas Tollway Authority will take a total of $1.17 billion of debt to market this week in a negotiated deal that includes $810 million of taxable BABs and $360 million of tax-exempt revenue bonds.

The authority will use $733.2 million of the proceeds to finance extensions of its Dallas-area toll road system and $302.1 million to refinance earlier debt. Other applications include $90.9 million to refund all of its existing commercial paper program, and $10 million to terminate several swap agreements.

The bonds are rated A2 by Moody’s Investors Service and A-minus by Standard & Poor’s. They are not expected to be insured.

Morgan Stanley and Goldman, Sachs & Co. will lead the underwriting syndicate for the negotiated sale.

RBC Capital Markets and TKG & Associates are co-financial advisers to the NTTA. McCall, Parkhurst & Horton LLP and Mahomes Bolden Warren Sigmon PC are co-bond counsel.

Bexar County Hospital District plans to offer about $71.6 million of Series 2009A certificates of obligation and $208.9 million of Series 2009B taxable CO’s that are considered BABs through negotiated sales led by Merrill Lynch & Co. and Siebert Brandford Shank & Co. LLC.

The tax-exempt certificates are structured as serials maturing in 2010 through 2023 and the BABs mature in 2024 through 2039.

First Southwest Co. and Estrada Hinojosa & Co. Inc. are the district’s co-financial advisers. Fulbright & Jaworski LLP and The Law Offices of William T. Avila PC are co-bond counsel.

Peggy Deming, the hospital’s chief financial officer, said the BABs structure was recommended by the district’s financial advisers back in February and officials “saw an opportunity to lower the overall cost to the taxpayer, and we’re very sensitive to what the taxpayers are paying.”

“It really makes sense for us to use the BABs and take advantage of this provision of the federal stimulus package,” she said. “After a thorough examination of the deal, our board estimates using the BABs will save us up to $38 million overall and about 6.6% interest on this issue alone.”

She said the hospital is in the midst of a $899 million master-facilities plan and proceeds from this issue will further fund projects outlined in that program.

Under the BAB program, the federal government will provides the district with a cash subsidy from the Treasury equal to 35% of the interest cost on the debt.

Standard & Poor’s upgraded the district’s credit to AA-plus from AA ahead of the sale, citing a deep and diverse tax base coupled with good operating results.

The district’s estimated 2010 taxable-assessed value of about $103.36 billion is up 33% from $69.2 billion for fiscal 2006.

“Despite the magnitude of the capital program, we believe debt levels will remain low and the tax rate impact should be minimal,” Standard & Poor’s analyst Horacio Aldrete-Sanchez said. “Demand for hospital services is likely to continue at similar, if not increasing, levels, and we expect financial margins to remain in line with historical results.”

Moody’s Investors Service assigned its Aa2 underlying rating to the bonds.

Analysts said the rating reflects the “historically demonstrated healthy growth patterns” of the county, which are driven by the diverse economy of San Antonio where the employment base includes a mix of military, tourism, financial, healthcare, and biomedical industries.

Moody’s said the hospital district’s tax base averaged 11% annual growth the past five years and projections show another increase of 1.4% for fiscal 2010.

“Although some residential values have declined, new commercial development is offsetting that loss resulting in an overall increase,” according to analysts.

Bexar County’s current population is nearly 1.6 million. The population has increased steadily the last two decades with a 17.5% increase in the 1990s and another 18% gain since the start of this decade. And projections have the population continuing to climb “creating more demand for medical services,” according to Moody’s.

Fitch Ratings assigned a AA-plus rating to the hospital’s bonds, which will price today.

The Harris County Cultural Education Facilities Corp. is bringing about $111.5 million of thermal-utility tax-exempt revenue bonds to market this week in two tranches on behalf of the TECO project.

The conduit issuer plans to offer about $98.5 million of Series 2009A thermal-utility revenue bonds and nearly $13 million of Series 2009B of thermal-utility revenue bonds through negotiated sales led by RBC Capital Markets. The Series 2009A bonds mature in 2010 through 2036 and the second series matures through 2015.

First Southwest Co. the financial adviser to the issuer. Proceeds will be loaned to the Texas Medical Center Central Heating and Cooling Services Corp., or TECO, for extensions to its chilled-water and steam system, and combined heat and power project.

TECO 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.

Moody’s Investors Service assigned its Aa3 underlying rating to the bonds.

Standard & Poor’s assigned a AA rating to the issue, citing TECO’s “position as a monopolistic provider of chilled-water and steam services to multiple customers with significant barriers to entry for potential competition.”

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