Fitch Downgrades Cerritos College District One Notch

LOS ANGELES — Fitch Ratings downgraded Cerritos Community College District's general obligation bond rating from AA-plus to AA, impacting $57.5 million in bonds. The outlook is stable.

Fitch analysts said they lowered the rating of the bonds, which are secured by an unlimited property tax pledge of the district, citing a weakened debt profile following a 2012 GO bond issuance that extended amortization and deferred repayment of most principal and accreted interest for more than 20 years.

The bonds impacted by the rating downgrade were the $2.7 million GO bond series 2004A, the $24.2 million GO bond series 2005A, and the $20.6 million GO bond series 2006B.

Analysts said they were also concerned that a recent authorization of additional GO bond borrowing by district voters would more than double outstanding debt levels.

District voters approved $350 million in new GO authorization at the end of 2012, which would raise the par value of overall debt levels to a still moderate 2.7% of total annual volume if issued immediately. New issuances are expected over a 10-year period and will support an expansive capital program to rehabilitate or replace multiple campus facilities, according to the report.

The community college district maintained a AA rating, according to Fitch, because of its strong operating performance demonstrated by the balanced operations through the downturn and strong reserve levels in excess of state minimum requirements.

Cerritos Community College District, located in southeastern Los Angeles County, encompasses 52 square miles. It provides instruction to approximately 23,000 students annually.

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