DALLAS — New Mexico's Las Cruces Public School District took a downgrade from Moody's Investors Service to Aa3 from Aa2 and remained on negative outlook as it went to market with $15.2 million of general obligation bonds.
"The downgrade to Aa3 reflects the district's recently implemented strategy to draw reserves to an extremely narrow position, which is below historical levels and will hinder near-term financial flexibility," Moody's analyst John Grayson Nichols explained. "Management's inability to restore structural operating balance over the near-term would place further downward pressure on the rating."
Robert W. Baird & Co. won the bid for the Las Cruces bonds on Dec. 16 with a true interest cost of 2.897%. Bonds with 3% coupons maturing in 2030 earned a yield of 3.1%. RBC Capital Markets served as financial advisor on the deal.
Despite the downgrade, the bonds carried Aa1 ratings through New Mexico's school bond enhancement program.
With 25,000 students and 3,600 employees, Las Cruces is the state's second-largest school district.
The southern New Mexico district covers the city of Las Cruces, including the White Sands Missile Range, and the towns of Dona Ana and Mesilla. The district has 24 elementary schools, eight middle schools and seven high schools.
With a population of more than 100,000, the city of Las Cruces is the second largest in the state behind Albuquerque and the county seat of Dona Ana County. The city is near the Texas border city of El Paso and also serves as the home of New Mexico's Spaceport America.
