NEW YORK - Moody's Investors Service said it has downgraded its rating on the Hotchkiss School, Conn.'s Series A bonds to Aa1/VMIG1 from Aaa/VMIG1.

The short-term VMIG1 rating is supported by a SBPA provided by U.S. Bank National Association (rated Aa2/P-1 with a negative outlook) that is effective through September 24, 2013. The outlook is stable at the new rating level.

The Aa1 rating reflects Hotchkiss' strong and improving market position as a selective private boarding and day school located in Connecticut, excellent balance sheet coverage of debt and operations, healthy liquidity and ample philanthropic support.

The rating downgrade also incorporates the school's reduced cash flow performance over the past two years per Moody's calculations, slower financial resource grow as compared to peers due to continued use of reserves to fund special projects and relatively weak investment performance compared to Aaa peers over the past three years.

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