DALLAS — Small and moderate-sized school bond issues predominate in Texas this week.
With the Texas Permanent School Fund sidelined by slumping investment results and capacity limits, school districts are venturing into the market without the PSF’s guarantee of a triple-A rating.
The Carroll Independent School District near Fort Worth is issuing $86 million in three series, including $7.9 million of Series B Build America Bonds. The largest piece, Series A, is $57 million of new-money general obligation bonds. Series C is $20.8 million of refunding bonds.
The negotiated deal is led by RBC Capital Markets.
With ratings in the double-A category, the issue represents credit strength that is attracting buyers in a still risk-averse market. Many districts rated in the single-A category and below have postponed issues until the return of PSF backing.
Moody’s Investors Service rates the Carroll ISD bonds Aa3, while Standard & Poor’s affirmed its AA rating.
Located in northeast Tarrant County, Carroll ISD serves an affluent suburban area between Dallas and Fort Worth. The district’s population has more than doubled since 1997 to about 28,235, which resulted in a student enrollment increase of nearly 50% over the same period.
Nearby Irving Independent School District offers a similar credit profile with ratings of Aa3 from Moody’s and AA-plus from Standard & Poor’s on $65 million of GOs. First Southwest Co. is senior manager on the negotiated deal, with RBC as financial adviser.
First Southwest is also senior manager on the Palestine Independent School District’s $64 million of GO bonds that carry single-A ratings from Standard & Poor’s and Fitch Ratings. Palestine ISD is a moderately growing district in East Texas. RBC is also financial adviser on the deal.
Just in time for this week’s negotiated sale of $45.5 million of GO bonds through Piper Jaffray & Co., the Waco Independent School District earned a boost into the double-A category from Standard & Poor’s, rising from A-plus to AA-minus.
Despite Waco ISD’s declining enrollment in the heart of Texas, “we believe the district will sustain its strong financial position despite declining student enrollment,” said Standard & Poor’s credit analyst Jennifer Garza.
A rating from Moody’s is pending. Analysts there conferred an A1 rating last year.
The Weatherford Independent School District west of Fort Worth is awaiting ratings on its $14.8 million deal. The last time Standard & Poor’s rated the district, it awarded an A on the underlying credit in 2007, which was wrapped with the triple-A PSF guarantee.
The Manor Independent School District near Austin is also waiting for ratings on its $14 million bond deal that will be sold through negotiation by RBC.
The Sinton school district near Corpus Christie will see what kind of interest its single-A rating from Standard & Poor’s can attract to its $7.5 million scheduled to be sold through First Southwest.
Beyond school districts, Montgomery County. north of Houston, will price $58.3 million of revenue bonds through Wachovia Bank. Ratings are pending on the deal.
New Braunfels, a scenic German-American settlement near San Antonio, is also awaiting ratings on its $9.5 million of revenue bonds.
Flower Mound, a suburb of Dallas and Fort Worth is offering investors $3.6 million of certificates of obligation and $4.7 million of general obligation refunding bonds through negotiation with Southwest Securities. Both issues carry ratings of Aa2 from Moody’s and AA-plus from Standard & Poor’s. First Southwest is financial adviser on the deal.