Moody’s Investors Service Thursday assigned a negative outlook to three Pennsylvania school district state aid intercept programs, affecting $12 billion of debt.
The negative outlook for the state aid programs follows Moody’s changing on Monday of the state’s general obligation outlook to negative from stable.
The three programs are the Pennsylvania Act 150 School District Intercept Program, rated A1, the Pennsylvania State Public School Building Authority Lease Revenue Intercept Program, and the Pennsylvania School District Fiscal Agent Agreement Intercept Program, both rated Aa3.
Pennsylvania has yet to pass a fiscal 2010 budget. The fiscal year began July 1. Moody’s cited the budget impasse and also the state’s need to issue — for the first time in more than 10 years — tax and revenue anticipation notes in fiscal 2010 as reasons for the negative outlook.
In related news, Moody’s Thursday placed $1.2 billion of Delaware Valley Regional Financing Authority debt on its negative watch list. Moody’s rates the credit Aa2. The authority, created in 1985, is an independent issuer that provides financing for capital projects in Bucks, Chester, Delaware, and Montgomery counties.
“The watch list action reflects the risks inherent in the authority’s complex debt structure in light of recent market disruptions that have impacted variable rate demand obligations and swap agreements,” according to a Moody’s report. “The watch list also reflects Moody’s ongoing review of the authority’s updated cash flows, proposed legal and structural indenture changes, and loan pool default tolerance.”