Standard & Poor's Ratings Services said it lowered its long-term rating to A from AA-minus on Hall County School District No. 2 (Grand Island Public Schools), Neb.'s series 2009 limited-tax Build America Bonds.
The outlook is negative.
"We lowered the rating based on the district issuing additional debt which diluted coverage to a level we no longer consider very strong," said Standard & Poor's credit analyst Blake Yocom.
The rating reflects the district's: reliable revenue stream, generated from the capped 5.2-cent special property tax levy, which is supporting the debt; very strong coverage beginning in fiscal 2015, assuming no additional debt secured by the special tax is issued; lack of plans to issue additional debt secured by the special tax; and general creditworthiness, reflected by its AA-minus general obligation bond rating.
Partially offsetting the above strengths is debt service coverage, which the agency considers low through fiscal 2014 due to the issuance of additional debt secured by the tax.
The limited-tax bonds are a special obligation of the district, payable only from a property tax levy, limited as to rate, and are not considered a GO of the district. Payment of debt service comes from a special levy in an amount not to exceed 5.2 cents on each $100 of taxable valuation for the series 2009 and parity bonds.
Grand Island Public Schools, in east-central Nebraska, covers roughly 9.1 square miles and includes all of Grand Island. The district's estimated population is 48,267, which represents roughly 82% of the population of Hall County.