DALLAS - The Texas Bond Review Board yesterday approved the first issues in a record $1 billion slate of negotiated refundings expected to be sold by yearend.

The first of the six issues, most of which are state-backed double-A rated general obligation bonds and all of which will be sold by the Texas Public Finance Authority, is expected to be sold by early October.

The six issues together make up the largest-ever block of refundings by a Texas agency. They are expected to generate up to $50 million in savings, with a present-value savings of 3% to 5% on each issue.

"They have a target of 3%, but there's flexibility with that," said Tom Pollard, outgoing executive director of the Bond Review Board. "If the market moves, it's not binding on them." Mr. Pollard is leaving Nov. 30.

The five-member board yesterday approved three of the largest proposed refundings.

The first deal is a $370 million refunding of GOs that will be handled by a group senior-managed by bookrunner Merrill Lynch & Co. and First Boston Corp. The second deal, to be sold the same day, is a $280 million GO refunding underwritten by bookrunner Lehman Brothers and co-senior managers Morgan Stanley & Co. and PaineWebber Inc.

The Lehman deal is tentatively designed to be sold as a RIB/SAVR, the firm's inverse floater product that officials have estimated could produce additional savings of 20 basis points over a traditional GO refunding.

However, if market conditions do not allow for such savings, the Texas Public Finance Authority has stipulated that the two refundings be merged with one selling group.

Also approved yesterday was a planned Oct. 22 sale of $129.3 million of revenue bonds to be underwritten by bookrunner Rauscher Pierce Refsnes Inc. of Dallas and co-senior manager George K. Baum & Co.

A fourth refunding is expected to be presented for board approval next month. The estimated $250 million refunding of Texas GO bonds was sold two years ago as the initial part of the state's $1 billion financing of the Superconducting Super Collider project.

Bookrunner Smith Barney, Harris Upham & Co. and co-seniors Goldman, Sachs & Co. and Dallas-based First Southwest Co. are expected to bring the offering to market in late October.

Two smaller issues have yet to be approved. They are a $35 million refunding in early December of Texas Parks and Wildlife Department bonds and a $13 million Texas State Technical College system deal.

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