Moody's Investors Service said it has downgraded to A1 from Aa3 the rating on the general obligation debt of the Colton Joint Unified School District, Calif., and assigned an A1 rating to the district's 2013 general obligation refunding bonds.
The downgrade of the GO rating to A1 from Aa3 is due to the material erosion of the tax base over the last 4 years and the severe narrowing of the district's liquidity.
The resulting A1 rating favorably incorporates the district's still relatively large and diverse tax base. Countering the above average size of the tax base are its demonstrated volatility to unfavorable market trends, as well as narrow liquidity due to the state deferrals, high debt burdens, low wealth levels, and the challenging economic landscape.
The bonds are secured by an unlimited property tax pledge. Proceeds from the current issue will refund the currently outstanding bonds which were issued in 2004 and 2006.