DALLAS — Dallas Independent School District expects about $15 million in net present value savings from $317.8 million of current refunding bonds expected to price July 1.
"It looks real favorable," Terry James, chief financial officer for DISD, said of the market outlook.
Gross interest savings on the debt should be about $30 million, James said.
The bonds, maturing through 2034, are pricing through negotiation with senior managers JP Morgan and Mesirow Financial. Siebert Brandford Shank & Co. and Sterne Agee & Leach Inc. are co-managers.
RBC Capital Markets and Estrada Hinojosa and Co. are financial advisors on the deal.
The bonds carry underlying ratings of Aa1 from Moody's Investors Service with a stable outlook. Standard & Poor's rated a previous issue AA-minus with a stable outlook Dec. 3. Fitch Ratings raised its outlook on the district's AA rating to positive from stable in November.
With this deal, DISD will have about $2.6 billion of debt outstanding, according to Moody's.
"The district's debt burdens are elevated at 3.2% direct and 5.6% overall of fiscal 2014 assessed valuation," noted Moody's analysts John Nichols?and Adebola Kushimo. "The district's direct debt burden remains elevated after district exhausted a sizeable general obligation debt offering of $1.35 billion, which was voter approved in May 2008."
The upcoming issue will refinance the district's series 2006 and 2008 bonds.
DISD built 15 new schools with funds authorized in the 2008 vote. The district also renovated 200 existing facilities.
DISD's debt overlaps with the city of Dallas and Dallas County Hospital District.
State funding to the district was cut by $65 million in fiscal 2012 and $35 million in fiscal 2013. To compensate for the lost funding, the district eliminated 1,442 positions and adjusted classroom sizes at the elementary level from 22 to 24 students per teacher. The measures produced another year-end surplus for fiscal 2012 and increased the general fund balance to $201 million.
"Favorable operations continued in fiscal 2013 with an $80 million operating surplus, which increased the total general fund balance to $281 million," Moody's noted. "The healthy 23.4% of General Fund revenues reserve level is a vast improvement since fiscal 2009."
