Moody's Investors Service said it has downgraded to Aa3 from Aa2 the rating on approximately $20.0 million in Channelview Independent School District, Texas, outstanding parity debt.
Moody's assigned a Aa3 underlying and Aaa enhanced rating to 's $7.39 million unlimited tax refunding bonds, Series 2013.
In addition to the underlying rating, Moody's assigned a Aaa enhanced rating to the current sale reflecting the guarantee of the Texas Permanent School Fund (PSF). The district has an additional $127.5 million in outstanding debt not rated by Moody's.
Proceeds from the current sale will be used to refund certain maturities of the district's outstanding debt for a projected net present value savings in excess of 6% with no extension of the final maturity.
The bonds are payable from an annual ad valorem tax levied, without legal limitation as to rate or amount, on all taxable property located within the district.
The rating assignment and downgrade to Aa3 reflects the concentration in the district's tax base, that has been outpaced by similarly rated credits, as well as the district's high debt burden with a slow payout of principal outstanding. The rating also reflects stable financial performance, healthy reserves, and a below average socioeconomic profile.
