DALLAS — Volume will be light in this abbreviated trading week in the Texas municipal market.In the largest deal of the week, the Beaumont Independent School District plans to issue $90 million of bonds through a negotiated sale led by UBS Securities LLC. RBC Capital Markets is the financial adviser to the Gulf Coast district and Orgain, Bell & Tucker LLP and Oliver W. Sprott, Jr. serve as co-bond counsel.The bonds will come to market with the triple-A backing of the state’s Permanent School Fund.Proceeds will fund construction of new elementary schools, classroom additions to some existing facilities, and district-wide renovations. This is the first sale from a $388.6 million authorization approved by voters in November, and the first new-money issue by the district in about a decade. Prior to November’s election, district voters had approved only one bond referendum in the past 30 years. As recently as 2002, voters rejected a bond referendum despite the district identifying more than $300 million of needs.The district currently serves about 19,300 students, which is a decrease from almost 21,000 in 2001, at 30 campuses that are about 50 years old on average.Standard & Poor’s rates the district’s underlying credit at A-plus, citing the area’s stable economic base and the significant presence of petrochemical businesses, its sound reserve levels, and a moderate debt burden. Analysts said the property-tax base concentration associated with the petrochemical industry moderates the credit strengths. Moody’s Investors Service rates the credit at A1.The district’s 10 top taxpayers account for about one-third of the taxable assessed valuation of the area. And these companies are some of the largest in the world: ExxonMobil Corp., Goodyear Tire & Rubber Co., DuPont, and BASF Corp., to name a few.Elsewhere, El Paso is bringing a two-tranche, GO issue to market worth about $78.1 million.The West Texas city plans to offer nearly $56.7 million of general obligation bonds and $21.4 million of GO refunding bonds in a negotiated sale led by Banc of America Securities LLC. Wachovia Bank NA and Morgan Stanley are co-managers.First Southwest Co. is the city’s financial adviser and Fulbright & Jaworski LLP is bond counsel.The refunding bonds are structured as serials maturing from 2009 through 2014, whereas the new-money debt matures through 2033.Standard & Poor’s assigned a AA rating to the sales due to the city’s increasingly diversified economy, “strong financial management practices,” and “preeminence as a regional economic center due to its strong access to international trade.”Fitch rates the city’s credit at AA-minus and Moody’s rates it Aa3.Last May, the FBI disclosed a widespread fraud and bribery investigation regarding numerous officials from the city, El Paso County, and the El Paso Independent School District. To date, a former county commissioner, the former chief of staff to a county judge, a former ISD trustee, a contractor, and two bankers have pleaded guilty to charges stemming from the investigation.The North Texas suburb of Frisco also is bring a two-tranche deal to market this week.The growing city will issue about $29 million of combination tax and revenue certificates of obligation with JPMorgan and Morgan Keegan & Co. as co-managers for the negotiated sale, and $20.3 million of taxable certificates of obligation with Morgan Keegan and RBC as co-managers.First Southwest is the financial adviser to the city, which is about 20 miles north of downtown Dallas, and McCall, Parkhurst & Horton LLP is bond counsel.Frisco’s 2008 population of about 101,500 is up 41% since 2004 and more than triple the 2000 Census figure of 33,714. Its current taxable assessed valuation of about $12.45 billion is up nearly 18% from the year earlier and almost double where it was five years ago.“Just like the rest of the economy, we’re slowing a bit but the growth is still coming,” said Nell Lange, assistant city manager. “There’s more commercial [development] coming in and we’re trying to get some capital projects done and keep dealing with the growth.” She said proceeds from the tax-exempt debt will fund expansion of the city’s StarCenter hockey arena to 5,000 seats from a 3,500-seat capacity and construction of a parking garage adjacent to the arena.“The taxable bonds will finance construction of an indoor recreation facility just north of Main Street as part of a joint venture with a private partner,” Lange said. David Medanich, vice chairman at First Southwest, said the taxable component is due to the lease payments to be paid by the private operators of the facilities.He also said the debt will come to market with the triple-A wrap provided by Financial Security Assurance Inc. Moody’s assigned a Aa3 rating and affirmed the rating on the city’s $622.9 million of debt outstanding.Analysts said the rating reflects Frisco’s sizable tax base despite slowing residential development, historically favorable financial results, and an elevated debt burden that’s expected to rise.Standard & Poor’s assigned a AA-minus underlying rating to the sale, citing the city’s sustained economic and property-tax base growth, high income and wealth indicators, and competitive property tax rate. Offsetting credit factors include “exceptionally high debt levels and carrying charges, coupled with ongoing growth pressures and an ambitious capital improvement program.” Fitch doesn’t rate the city’s underlying credit.The growing Houston suburb of Pasadena plans to competitively offer $55.4 million of waterworks and sewer system revenue bonds today. RBC Capital Markets is the financial adviser to the city, which is the largest suburb in the Houston area with nearly 155,000 residents, according to analysts. The city’s population is up about 10% since the 2000 Census tally of 141,674. Andrews Kurth is bond counsel.Proceeds from the debt will finance expansion of a water-treatment plant.Both Fitch and Standard & Poor’s assigned an A-minus rating to the sale. Also in the competitive market today, Bridgestone Municipal Utility District plans to offer about $17 million of waterworks and sewer system combination unlimited tax and revenue bonds.Carlin Short is the financial adviser to the district in Harris County about 23 miles northwest of downtown Houston.Standard & Poor’s assigned a BBB-plus rating to the sale due to the district’s strong financial position and solid assessed-value growth. Some mitigating credit factors include a high overall debt burden and additional long-term debt plans to improve undeveloped acreage.
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