McKeesport ASD, Pa., Downgraded to A3 by Moody's

Moody's Investors Service said it has downgraded to A3 from A2 the McKeesport Area School District, Pa.'s general obligation affecting $96 million in outstanding general obligation debt.

Concurrently, Moody's assigns an A3 rating the district's $26.6 million general obligation bonds, Series of
2013 and confirms the A1 enhanced rating. The outlook is negative.

The bonds are secured by the district's limited tax general obligation pledge as debt service is subject to Special Session Act 1 property tax limitations (Taxpayer Relief Act). Proceeds from the bonds will fund the demolition of a school facility and the design and construction of a new facility.

The downgrade to A3 from A2 reflects the school district's narrowing financial position, small but stable tax base and significantly above average debt burden.

The assignment of a negative outlook reflects the district's narrowing financial position and increased reliance on fund balance appropriations to fund increasing fixed costs, including pension contributions and debt service.

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