DALLAS — The Krum Independent School District and Boyd Independent School District are pricing bond issues this week on the heels of credit upgrades.

Both sales exhaust bond authorizations approved by voters within the North Texas districts in November.

The Krum ISD, which is about 42 miles north of Fort Worth, sold $7.5 million of school building bonds yesterday following an upgrade of its underlying credit to A-minus from BBB-plus by Standard & Poor’s. Results of the sale weren’t immediately available. Southwest Securities Inc. and First Southwest were co-managers for the negotiated sale. Fulbright & Jaworski LLP is bond counsel.

The Boyd ISD, which is about 30 miles north of Fort Worth, plans to offer nearly $24 million of school building bonds today through a sale led by First Southwest Co. with RBC Capital Markets and Edward Jones as co-managers.

Moody’s Investors Service upgraded its underlying rating on the school system two notches to Baa1 from Baa3 due to an improved financial position and “strategic financial management practices.”

Proceeds from the sale will fund a new high school and additions to other campuses.

Both issues come to market with the triple-A wrap provided by the state’s Permanent School Fund.

Standard & Poor’s analysts cited the Krum district’s significant property-tax base growth and increasing reserves in the upgrade.

New techniques for extracting natural gas from the Barnett Shale have been a boon to the economies of many municipalities around Fort Worth, the rest of Tarrant County, and the surrounding counties.

The property tax base of the Krum ISD, which draws students from Denton County and Wise County, has nearly tripled the past six years or so to $726.3 million for fiscal 2008 from $243.3 million in 2002.

Analysts said the district’s participation in the strong Dallas-Forth Worth economy and labor market coupled with limited capital needs also factored in the upgrade.

“It is our belief that the projected continuation of the district’s strong assessed value growth will offset associated operating budget pressures and allow management to maintain its strong financial position,” said Standard & Poor’s credit analyst Sarah Smaardyk.

“We also believe district officials will continue to maintain their general fund balance goal, which will provide needed flexibility as the district faces further growth pressures and potential property tax base volatility due to the concentration of oil and gas resources,” she said.

Proceeds from yesterday’s issue will be used to complete construction of an early education center, a fine arts addition at the high school, and upgrades to athletic facilities.

The district doesn’t expect to call for another bond election this year.

Enrollment has averaged about 4% growth the past decade climbing to 1,500 students currently at the district’s four campuses. Officials expect continued growth for the next four years with an estimated student population of 2,000 by 2011.

Moody’s analysts said the Boyd ISD also has benefited from its location within the Barnett Shale, and oil and gas companies account for almost half of the district’s property value.

Officials indicate increased residential development is expected over the next decade. But Moody’s analysts expect the concentration of oil and gas revenue to persist, “leaving the district’s revenue stream susceptible to downward fluctuation.”

The district’s fiscal 2008 assessed valuation of $615 million is up about 185% from $216.4 million five years ago.

Enrollment in the Boyd district’s four schools has remained flat at about 1,050 students for the past 10 years.

Fitch Ratings doesn’t rate the underlying credit of either school district.


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