DALLAS — Triple-A rated Travis County is bringing a three-tranche issue worth $31.4 million to the competitive market Tuesday.
The central Texas county plans to offer $17.7 million of limited-tax certificates of obligation, nearly $7 million of unlimited-tax road bonds, and $6.7 million of permanent improvement bonds.
Proceeds from the certificates will fund new telecommunications and computer equipment, as well as upgrades to existing systems, a new office building, vehicle purchases, heating and air-conditioning improvements at county offices, and equipment for adult probation services. The permanent improvements bonds will fund park upgrades and land acquisition for new parks.
D. Ladd Pattillo & Associates Inc. is financial adviser to the county and Vinson & Elkins LLP is bond counsel.
Travis County, which includes the state capital of Austin, carries natural triple-A ratings from all three ratings services and the financial adviser expects strong demand for the debt.
“The market looks very hot right now for natural triple-A-rated stuff,” said Ladd Pattillo, president of D. Ladd Pattillo & Associates. “I was looking at the spread a few week ago between triple-B and triple-A debt and it was unreal. We may see 1.80% on the short end and 3.90% on the long pieces.”
The five-year certificates mature next year through 2014, while both series of bonds are structured as serials maturing in 2010 through 2029.
Travis County normally sells multi-tranche issues early in the year, but waited until May this year to include audited financial statements in the offering’s documents.
Yields on the $50.2 million of similar debt the county sold in February 2008 ranged from 1.85% with a 4% coupon on road bonds maturing this year to to 4.58% with a 4.25% coupon on COs maturing in 2028.
“We like to issue all three tranches at the same time to cut down on excess printing costs for disclosure statements,” Paddillo said. “The county had the funds on hand to keep some projects going and we didn’t want to put unaudited numbers in the [preliminary official statement].”
The county’s fiscal 2009 taxable-assessed value of about $95.3 billion is up 12% from the prior year and an increase of more than 65% since 2002.
Standard & Poor’s assigned a AAA rating to next week’s issue, reflecting the county’s deep economic base, sustained strong management, high income and wealth levels despite a significant student population, and moderate overall debt.
Moody’s Investors Service rates the county at Aaa and Fitch Ratings rates the credit at AAA.
The state government and University of Texas, as well as other colleges, anchor the economy of the county, which leads to its stability, according to analysts.
Earlier this year, the Census Bureau said the Austin-Round Rock area was the second-fastest growing metropolitan area in the country between 2007 and last year, adding some 60,000 new residents and pushing the total population of the area to about 1.7 million. Round Rock, which is about 20 miles north of downtown Austin, is in Williamson County.
Travis County’s population topped one million earlier this year, and Austin’s current population of about 736,000 is up 12% from the start of the decade.