DALLAS — A handful of issues are expected to price this week in Texas following the Labor Day holiday.

In the largest deal of the week, Edinburg Consolidated Independent School District plans to bring $111.9 million of school building bonds to market through a negotiated sale led by Banc of America Securities.

Estrada Hinojosa & Co. Inc. is the financial adviser to the South Texas district and Ramirez & Guerrero LLP serves as bond counsel.

The sale exhausts the entire bond package approved by voters in May for six new campuses, conversion of a middle school to a high school, three multi-purpose fine arts centers, land acquisitions for more schools, and renovations to existing facilities.

Standard & Poor’s assigned an A underlying rating to the deal, citing the district’s rapidly expanding economic and property-tax bases, strong financial performance, moderate debt, and strong state support for debt-service payments as credit strengths.

Fitch Ratings also assigned an A underlying rating and Moody’s Investors Service rates the district’s credit at A2.

The district’s enrollment has been growing by nearly 4% annually the past three years and is nearly 30,000 now with many district facilities operating over capacity. The district currently has 5,000 students, which is the equivalent of about six elementary schools, using 179 portable classrooms.

Officials project yearly enrollment gains of 4.5% for the next few years, eventually pushing the total student population to almost 46,000 by 2016.

Valley View Independent School District will offer about $16.8 million of school building bonds this week in a negotiated sale with Estrada Hinojosa as sole manager.

Proceeds will be used for a new ninth-grade campus, according to business manager Noberto Mendiola. The sale represents the entire authorization approved by more than 90% of district voters in May.

RBC Capital Markets Corp. and First National Bank are co-financial advisers to the South Texas district. Like Edinburg CISD, Valley View is in Hidalgo County on the border with Mexico.

Vinson & Elkins LLP is bond counsel to Valley View ISD.

Fitch Ratings upgraded its underlying rating on the district to A from A-minus ahead of the issue. Analysts said the upgrade reflects a growing tax base with prospects for continued commercial development, improved tax-collection rates, and consistently strong financial performance despite rapid enrollment growth. 

Enrollment has averaged annual gains of about 9.4% since 2002 to about 4,300 for the current school year, according to analysts. The tax-base growth continues to outpace student enrollment gains at almost 19% annually over the past five years, Fitch said.

Standard & Poor’s also assigned an A underlying rating to the sale.

All the school debt expected to price this week in Texas also comes to market wrapped with the state’s triple-A rated Permanent School Fund.

Following an upgrade from Standard & Poor’s, the growing suburb of Missouri City plans to offer $35.6 million of general obligation debt today for infrastructure expansions.

The city about 20 miles southwest of downtown Houston will issue nearly $21.1 million of GO bonds and $14.5 million of combination tax and revenue certificates of obligation.

Morgan Keegan & Co. Inc. is lead manager for the negotiated sale. RBC Capital Markets and Southwest Securities Inc. are co-managers.

First Southwest Co. is the financial adviser to the city. Andrews Kurth LLP serves as bond counsel.

Proceeds from the certificates will fund utility expansions, while fund the bonds will be used for improvements to streets, as well as parks and recreation centers.

Standard & Poor’s upgraded its underlying rating on Missouri City to AA-minus from A-plus due to “the city’s historical maintenance of very strong reserves and continued economic expansion.”

Fitch Ratings assigned an A-plus rating to the sale and said prospects for continued tax-base growth are promising due to “the extension and expansion of transportation corridors leading from Houston and numerous high-end master planned communities in the city’s extra-territorial jurisdiction.”

Fitch analysyts said the taxable-assessed value has averaged 7% annual growth the past five years to nearly $4.14 billion for fiscal 2008 with another 4% gain projected for this year to $4.32 billion.

Moody’s Investors Service rates Missouri City’s GO debt at Aa3.

Missouri City’s population of about 70,000 is up 32% from the 2000 Census.

Bexar County is still trying to price about $109.1 million of venue-project revenue and refunding bonds in multiple series.

JPMorgan is lead manager for the negotiated issue that was originally expected to price last week.

Most of the sale is a refunding, with about $11.5 million of new-money bonds for continued development of amateur sports and tourism projects.

In May, voters in the county, which includes San Antonio, approved extending the existing 1.75% hotel-occupancy tax and 5% car-rental tax, which were first approved in 1999 to finance the construction of the AT&T Center.

Revenue from the taxes will support debt to fund an extension of the San Antonio River Walk, new athletic fields, upgrades to a rodeo arena, other cultural-arts projects, and improvements to the AT&T Center, which is home to the Spurs of the National Basketball Association.

Fitch Ratings assigned an A rating to the sale and affirmed the rating on the venue-project revenue bonds outstanding. Analysts cited the county’s “role as the top tourist destination in Texas, ongoing expansion of hotel-room capacity with major convention center and resort hotels, strong voter support for the venue-tax extensions and diverse tourism related projects” as credit strengths.

The rating also reflects the “inherent volatility of the pledged revenue streams during economic downturns.”

Moody’s Investors Service assigned its A2 rating to the sale and analysts said “the hospitality industry has a significant impact on the local economy.” 


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