DALLAS — Several large deals are set to price this week in Texas, including an offering from the state’s third-largest school system that includes Build America Bonds.
The Cypress-Fairbanks Independent School District plans to offer about $225 million of Series 2009A unlimited-tax school building bonds and $185 million of Series 2009B taxable BABs through negotiated sales led by Merrill Lynch & Co.
RBC Capital Markets is financial adviser to the growing suburban Houston district, and Vinson & Elkins is bond counsel.
Officials won’t insure the bonds and will rely upon the district’s underlying ratings to secure the lowest possible rates. The state’s triple-A rated Permanent School Fund has suspended school bond guarantees due to declining investment results and capacity limits.
Texas school bonds coming to market of late in the double-A category have proven to be the make-or-break threshold for districts in a risk-averse market.
Fitch Ratings last week affirmed its AA-minus rating on the Cy-Fair district, citing a “solid tax base, sound management practices, historically healthy financial position, and operating and capital pressures associated with rapid enrollment growth.”
Now with more than 100,000 students, Cy-Fair is the state’s third largest school district behind Houston and Dallas. Standard & Poor’s assigned a AA-minnus rating to the sale and Moody’s Investors Service affirmed its Aa3 rating on the district’s credit, according to Stuart Snow, associate superintendent for business services.
A few other school districts from across the Lone Star State plan to issue bonds this week, as well.
The Lubbock-Cooper Independent School District will offer $80 million of school building bonds through a negotiated sale led by Wells Fargo Brokerage Services LLC. Specialized Public Finance Inc. is the financial adviser to the West Texas district that carries underlying ratings of A-plus from Standard & Poor’s, A from Fitch and A3 from Moody’s.
The Abernathy Independent School District expects to price $10 million of school building bonds at some point this week in a negotiated sale led by BOSC Inc. Standard & Poor’s assigned an A-plus rating to the bonds. Abernathy is about 21 miles north of Lubbock. The district serves about 800 students in three schools.
The Palestine Independent School District plans to issue about $64 million of school building bonds through a negotiated sale led by First Southwest Inc. RBC is the financial adviser to the East Texas district. Palestine ISD’s credit is rated A by both Fitch and Standard & Poor’s.
The Coppell Independent School District is bringing about $46.6 million of school building and refunding bonds to market in a negotiated sale led by Southwest Securites Inc. this week. And the Corpus Christi Independent School District plans to offer $23 million of school building bonds through a negotiated sale led by Frost Bank.
Both Coppell ISD, which is just northeast of Dallas-Fort Worth International Airport, and Corpus Christi ISD on the Gulf Coast carry underlying ratings of AA from Standard & Poor’s and Fitch.
The Waco Independent School District has $45.5 million of school building bonds set to price in a negotiated sale led by Piper Jaffray & Co.. RBC Capital Markets is the financial adviser to the central Texas district, and Vinson & Elkins LLP is bond counsel.
Last week, Standard & Poor’s upgraded Waco ISD’s rating to AA-minus from A-plus citing a “diverse and growing economic base and historical commitment to a strong and stable financial position.”
Proceeds from the bonds will fund renovations to the district’s 33 campuses and provide for consolidation of schools.
Moody’s assigned its A1 rating to this week’s sale. Analysts said the district’s taxable-assessed value averaged 6.8% growth the past five years to $3.73 billion for fiscal 2009.
Houston is bringing multiple tranches to market over the next few weeks, beginning with $420 million of airport system senior-lien revenue and refunding bonds this week. JPMorgan will lead the underwriting syndicate for the negotiated sale. Standard & Poor’s assigned a AA-minus rating to the airport bonds and Moody’s assigned its Aa3 rating to the debt.
The nation’s fourth-largest city also may price nearly $500 million of public-improvement refunding bonds Series 2009A and Series 2009B Build America Bonds this week, as well.
The triple-A rated Texas Water Development Board is bringing multiple tranches to market today, including nearly $230 million of state revolving fund subordinate-lien revenue bonds Series 2009A and Sub-Series 2009A-1, and about $33.9 million of subordinate-lien revenue refunding bonds Series 2009A, Sub-Series 2009A-2.
Proceeds from the new-money component reimburse the board for loans made to local utility districts for wastewater-system upgrades.
Fitch assigned a AAA rating to the bonds and analysts said the gilt-edged rating reflects the “credit quality of the underlying loan pool and the program’s overcollateralization due to excess loan repayments, and a debt-service reserve fund pledged to senior-lien bondholders.”
