The city of Denton, Texas, issued $149.1 million in bonds to make infrastructure and public safety improvements.
The bonds mature between 2024 and 2044, yielding between 2.73% and 4.1%. The city also issued three term certificates: the first set, about $5.8 million, matures on February 15, 2046, and is priced to yield 4.15%; the second set, about $9.7 million, matures on February 15, 2049, and is priced to yield 4.17%; the third set, about $14.9 million, matures on February 15, 2053, and is priced to yield 4.178%. The securities received a rating of AA+ from Fitch Ratings and AA+ from S&P Global Ratings.
The rating reflects the city’s “superior financial resilience and operating reserve cushion, supported by strong revenue growth prospects, a high degree of revenue-raising capacity and sound expenditure flexibility,” according to Fitch.
The issuance comes amid worsening wildfires 100 miles west of Dallas and a deadly heatwave in Texas that has extended into its third week. The first listed use of the bonds proceeds is the “acquiring, constructing, installing and equipping [of] fire stations,” according to the official statement accompanying the sale of the bonds.
Denton is a city in the northern Dallas-Fort Worth metroplex. Its population has grown by nearly one-third over the past decade, increasing the city’s taxable base.
The bonds are general obligations of the city, backed by property taxes. Those taxes are limited to $2.50 per $100 of assessed valuation. The bonds will also be supported by excess revenue from the city’s utilities.
Morgan Stanley & Co LLC served as underwriter on the bonds, purchasing the securities for about $126 million. The price reflected a premium of $7.4 million. Mesirow Financial Inc served as underwriter on the certificates, purchasing them for about $30 million. The price reflected a premium of $8.7 million.