Standard & Poor's Ratings Services said it lowered its underlying rating on Dublin School District, Ga.'s general obligation debt outstanding to BB-plus from BBB.
At the same time, Standard & Poor's lowered its appropriation rating on the lease revenue bonds to BB from BBB-minus issued by Dublin City and Laurens County Development Authority for the district. The outlook on both ratings is stable.
"The downgrade reflects our opinion of the district's structurally imbalanced operations, failure to carry out its deficit elimination plan according to the original timeline, weak liquidity position, and exposure to adverse economic conditions that could lead to inadequate capacity to meet its financial commitment," said Standard & Poor's credit analyst Apple Lo.
The stable outlook on the ratings reflects the risks related to Dublin School District's credit profile, including the district's exposure to what we deem to be nonremote contingent liability risk related to the district's bank loan.
The district has about $700,000 of a bank loan outstanding that contains certain events of default, including a material adverse change clause, what S&P deems permissive and that, if triggered, could result in immediate principal acceleration. The loan matures at the end of March 2015 and the district is confident about paying off the amount before the end of February on the receipt of property tax revenues.
Standard & Poor's also affirmed its AA-plus program rating, and stable outlook, on the district's existing GO bonds.
