NEW YORK - Moody's Investors Service said it has downgraded to Aa3 from Aa2 the underlying rating for Brownsville Independent School District, Texas, general obligation unlimited tax bonds.

At the same time, Moody's has also downgraded Brownsville Independent School District Public Facility Corporation's lease revenue debt to A1 from Aa3.

The downgrades affect approximately $174.8 million of GOULT and $14.3 million of lease revenue debt. The general obligation bonds are payable from the proceeds of a continuing, direct annual ad valorem tax levied, without legal limitation as to rate or amount, against all taxable property located within the district.

The lease revenue bonds are secured by lease payments made by the Brownsville Independent School District to the corporation from lawfully available funds.

The rating downgrades primarily reflects the district's significant uses of reserves for capital projects over the last four fiscal years that have weakened a once large financial cushion.

The Aa3 general obligation rating also incorporates the district's sizeable and stable tax base, minimal direct debt burden after state aid support is applied, as well as a weak socioeconomic profile. The A1 lease revenue debt rating reflects the essentiality of the asset, which is a school facility.

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