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Moody's Corporation

Moody's assigns Aa2 to Norris School District's (CA) G.O. bonds

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$9.3 new debt affected; outstanding parity debt upgraded to Aa2 from Aa3

New York, July 22, 2014 --

Moody's Rating


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Issue: 2012 Election General Obligation Bonds, 2014 Series B, Capital Appreciation Bonds; Rating: Aa2; Sale Amount: $4,712,392; Expected Sale Date: 7/30/2014; Rating Description: General Obligation

Issue: 2012 Election General Obligation Bonds, 2014 Series B, Current Interest Bonds; Rating: Aa2; Sale Amount: $4,630,000; Expected Sale Date: 7/30/2014; Rating Description: General Obligation

Opinion

Moody's Investors Service has assigned an Aa2 rating to Norris School District's (CA) 2012 Election General Obligation Bonds, 2014 Series B totaling approximately $9.3 million, consisting of $4.7 million of Capital Appreciation Bonds and $4.6 million of Current Interest Bonds. We have also upgraded to Aa2 from Aa3 the rating on the district's outstanding general obligation bonds totaling approximately $18.3 million. The general obligation bonds are secured by an unlimited property tax pledge of the district. The 2014 Series B bonds will be used to finance the construction and modernization of district facilities. The outlook on the district's ratings is stable.

SUMMARY RATING RATIONALE

The upgrade to Aa2 largely reflects the strong financial performance throughout the economic recession and the expectation that the district's financial performance will continue to be strong. We expect reserves will increase in fiscal 2015, despite the statewide trend to draw down reserve levels in connection with improved funding from the state. We expect the district's strong financial profile to be maintained in the long-term. Also positive, the district's ending general fund cash position has improved since the last review.

The upgrade also incorporates the district's relatively small tax base that has grown in recent years and will likely continue to increase in value in the near-term and the above-average socioeconomic profile of the district's residents. While the tax base is limited in size, the district's full value per capita is comparable to national medians for Aa2-rated school districts, while the district's socioeconomic profile exceeds comparable state and national medians. The district has an above-average gross debt burden that we expect will remain manageable given the growth of the tax base and the support of local taxpayers. The district's net direct debt levels, which reflect the district's general obligation bond burden, are average for the Aa2 rating category.

The general obligation rating reflects the strength of the voter-approved, unlimited property tax pledge securing the bonds and the well-established levy and collection history for the debt service payment. The county rather than the district levies, collects, and disburses the district's property taxes, including the portion constitutionally restricted for debt service on general obligation bonds.

The stable outlook reflects our opinion that the Aa2 rating will likely be maintained in connection with the expected financial performance stability and the improvement currently underway in the tax base.

STRENGTHS

- Recent growth in the district's tax base

- Very strong financial position that we expect will be maintained

CHALLENGES

- Above-average gross debt burden

- Small tax base for the rating category compared with other California school districts

WHAT COULD MOVE THE RATING-UP

- Trend of significant growth in assessed valuation

- Improvement in the district's fund balance percentages

WHAT COULD MOVE THE RATING-DOWN

- Deterioration in the district's financial position

- Protracted decline in the district's assessed valuation

RATING METHODOLOGY

The principal methodology used in this rating was US Local Government General Obligation Debt published in January 2014. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Christian Richard Ward
Analyst
Public Finance Group
Moody's Investors Service, Inc.
One Front Street
Suite 1900
San Francisco, CA 94111
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

William Oh
Analyst
Public Finance Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

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This noodl was issued by Moody's Corporation and was initially posted at www.moodys.com. It was distributed, unedited and unaltered, by noodls on 2014-07-22 23:55:42 UTC. The issuer is solely responsible for the accuracy of the information contained therein.

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