We would like to correct commentary in a recent article describing our rating action on San Diego school district bonds as a shift in our approach.
The statutory lien law is not the basis for our view. Our view remains that the statutory lien law does not eliminate the risk of an automatic stay. The law firms involved have acknowledged this.
We have said in our commentary that an alternative analysis that considers whether revenues are "special revenues" under Chapter 9 and not exposed to interruption risk in an automatic stay, would need to be supported by strong legal opinions. The San Diego Unified School District worked with counsel to deliver the needed opinions. This is the first time such opinions have been delivered. Consistent with what our commentary and criteria clearly say, we reflected that legal analysis in our credit analysis. It is a change in market practice and not any change in our approach that lead to the result on the San Diego Unified School District debt rating.