PHOENIX - California's Berkeley Unified School District will sell $18 million of general obligation bonds next week, buoyed by a Fitch Ratings AAA.
The bonds are rated AAA because the agency believes that the property tax revenues backing them qualify as "pledged special revenues" under the U.S. bankruptcy code and state law would therefore not be subject to interruption even if the district were to declare bankruptcy.
Fitch announced last month that it will require a special legal opinion in order to issue a GO bond rating on a California school district based on its assessed property values, as opposed to its general fund and operations. The rating agency began evaluating districts this way after Orrick, Herrington & Sutcliffe, San Diego Unified School District's bond counsel, provided rating agencies with legal opinions on bankruptcy risks ahead of a November bond sale.
Proceeds from the sale, scheduled for April 12, will be used to refund outstanding debt.
The district expects to issue approximately $85 million in new GO debt through 2020, which Fitch said should not materially impact moderate overall debt ratios.