Moody's Investors Service said it has downgraded Clark County School District, Nev.'s general obligation limited tax rating to A1 from Aa3 in conjunction with the anticipated sale of its general obligation (limited tax) medium-term bonds Series 2013A and general obligation (limited tax) refunding bonds Series 2013B.
The outlook on the district's bonds is stable.
At this time, Moody's also downgrades to A1 the city's outstanding parity limited tax general obligation debt totaling an additional $3.1 billion.
The bonds are secured by the full faith and credit of the district within the constitutional limitations of the district's operating rate and its dedicated debt service tax rate of approximately $5.534 per $1,000 of assessed valuation. The series 2013A bonds will be used to fund purchases of buses and technology districtwide. The series 2013B bonds will be used to refund certain outstanding maturities of the district's series 2003D, 2004D and 2005C bonds.
The downgrade reflects the district's weakened financial position relative to large school districts nationwide, continued insufficient coverage of limited tax debt service from property tax levies with limited levy raising ability, and ongoing though diminished operational imbalance.
The ratings also reflect the district's favorable long-term credit characteristics including a substantial tax base, history of outperforming otherwise unfavorable budgets, moderate debt burden, rapid amortization of principal, and statutorily-mandated debt service reserves.
The stable outlook reflects the expectation that the district's financial performance and ability to achieve sum sufficient debt service coverage from property tax revenues will remain challenged as officials manage an era of limited operating flexibility. Additionally, Moody's expects that given rapid debt amortization, the district has ample opportunity and market access to manage its debt service levy through debt restructuring.
