NEW YORK - Moody's Investors Service said it has downgraded the Bethlehem Central School District, N.Y.'s general obligation rating to Aa3 from Aa2.

The Aa3 rating applies to the district's $31.19 million school district refunding bonds, Series of 2012, as well as roughly $46 million of outstanding parity debt.

The bonds are secured by the district's unlimited property tax pledge.

Proceeds from the current issue will be used to advance refund the district's Series 2005, Series 2005B, and 2006A bonds for combined estimated net present value savings of approximately $1 million, or 3.1% of refunded principal.

There is no planned extension to the final 2022 maturity, and the savings are scheduled to be recognized evenly throughout the life of the bonds.

The downgrade to Aa3 incorporates a trend of reserve draw-downs, multi-year operating deficits, and a General Fund balance that is well below peers. The rating also reflects a strong, suburban tax base in a stable regional economy, forward-looking financial management, and an above-average but manageable debt burden.

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