Moody’s Investors Service downgraded the Beaverton, Ore., school district’s underlying unlimited-tax general obligation bond rating to Aa2 from Aa1.

The action came ahead of a $161 million sale of GO refunding bonds.

“The downgrade to an Aa2 underlying rating reflects the district’s weakened and volatile financial position resulting from intentional draw-downs below the board’s 5% reserves target,” Moody’s said in a report last week.

The bonds will receive an Aa1 enhanced rating with a stable outlook through Oregon’s school bond guarantee program.

Moody’s action affects $340 million of the district’s debt.

The agency said it also downgraded the district’s limited-tax GO bonds to Aa3 from Aa2. It has a negative outlook on the Beaverton bonds.

“The negative outlook incorporates Moody’s expectation that despite a credible plan to rebuild general fund reserves to the district’s 5% target, its strained financial position leaves district liquidity susceptible to unexpected shocks,” the report said.

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