Moody's Investors Service said it downgraded to Baa1 from A3 the rating on Bingham County School District No. 58 (Aberdeen), Idaho's Series 2011 general obligation bonds outstanding in the approximate amount of $3.8 million.
A negative outlook has also been assigned. The bonds are secured by the district's unlimited property tax pledge.
The downgrade primarily reflects the district's stressed financial position characterized by the absence of any meaningful operating reserves. The district also has little to no liquidity and relies on its debt fund to meet cash flow needs, substantially increasing the risk to bondholders.
The rating additionally reflects the district's exceptionally small but stable tax base and below average wealth indices and modest debt burden that amortizes rapidly.
The negative outlook reflects Moody's expectation that the district's finances will remain pressured in the near-term despite one-time funding from a voter-approved supplemental tax levy. The district's inability to replenish and maintain reserves in the near to medium-term will result in downward rating pressure.
