The Texas Public Finance Authority sold $365 million in bonds to provide funding for cancer research and refund a previous issuance.
The bonds, which are taxable, mature between 2024 and 2043, yielding between 4.528% and 5.235%. They received a rating of AAA from Fitch Ratings and AAA from S&P Global Ratings.
The rating reflects Texas’ “growing economy and the ample fiscal flexibility provided both by its conservative approach to financial operations and the maintenance of substantial reserves, including in its budgetary reserve, the economic stabilization fund” according to Fitch.
The issuance comes after Texas revenue for last fiscal year exceeded budgeted estimates. State revenue increased 26% year over year in fiscal year 2022. The state recently revised its forecast of revenue available for annual general purpose spending in the upcoming year up by 20%, to $80 billion.
A primary revenue driver is oil and gas production. Amid last year’s energy boom, Texas collected $24.7 billion in state and local taxes and royalties on the oil and gas industry, according to the Texas Oil and Gas Association. In turn, natural resources development directly accounted for 11.2% of Texas’ economy, according to Fitch.
The bond proceeds will fund research grants at the Cancer Prevention and Research Institute of Texas, a taxpayer funded research center in Austin.
The bonds are general obligations of the state, secured by its full faith and credit.
Ramirez & Co Inc served as lead underwriter on the issuance, purchasing the bonds at a discount of $1 million.