Texas board set to approve about $540 million of debt.

DALLAS -- The Texas Bond Review Board is expected Thursday to approve the issuance of almost $540 million of bonds and notes, primarily for home mortgage programs, according to Albert Bacarisse, the agency's executive director.

The largest issue scheduled for approval is a $368 million debt package by the Texas Veterans Land Board to refund existing bonds, replenish mortgage loan funds, and create college savings bonds.

The package will be sold in four series, with pricing scheduled on Oct. 12 and delivery on Nov. 4. Smith Barney Inc. will be the bookrunning manager, and Alex. Brown & Sons and Prudential Securities Inc. will be co-senior managers.

In the deal, about $87.8 million of tax-exempt serial and term bonds maturing from 1995 to 2016 will be sold to refund existing debt and provide $6 million or more of capital appreciation bonds for college savings.

In addition, $160 million of serial and term bonds with maturities from 2003 to 2025 and $20 million of tenn bonds maturing in 2013 to 2025 would be sold to provide funds for veteran home loans and improvements at below market rates. Those tax-exempt issues will be coupled with $100 million of taxable debt in both serial and term bonds maturing in 1996-2015.

Brace SaLzer, director of funds management for the Veterans Land Board, said the complicated structure stemmed partially from federal tax legislation that prohibits the use of tax-exempt bond proceeds to benefit veterans who served after 1977.

He also said the refunding and the blending of new money for the mortgage pool would result in new loan rates of about 6.99%. Other bond issues scheduled for approval are:

$84.14 million of mortgage revenue bonds through the Texas department of housing and community affairs. Proceeds will be used to provide funds to finance low-interest mortgage loans for first-time home buyers. The deal will be priced Oct. 18 and close Oct. 26.

* $75 million of commercial paper notes through the Texas department of housin g and community affairs. The notes, with maturities of up to 270 days, will be use d to recycle mortgage prepayments into new mortgage loans. The deal, to be managed

by Goldman, Sachs & Co., is scheduled to close Oct. 31.

* $7 million of taxable bonds to be issued by the Texas Water Development Boar d.

The board will use the bond proceeds to fund agricultural water conservation loans. Artemis Capital Group is the senior underwriter for the deal, which is scheduled to be priced Oct. 3 and closed Oct. 24.

* $3.93 million of 11-month notes to provide building and renovations funds at the University of Houston in Texas. The notes will be sold through competitiv e bid on Oct. 20.

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