Moody's Investors Service has downgraded to A3 from A1 the rating on Madison Local School District's (OH) outstanding general obligation debt. Concurrently, a negative outlook has been assigned to the district. The A3 rating and negative outlook apply to $23.9 million of outstanding rated debt.

The outstanding rated bonds are secured by the district's general obligation unlimited tax pledge. The downgrade to the A3 rating reflects the district's very narrow General Fund cash reserves which are projected to deteriorate to below $30,000 at fiscal year-end 2013. Also incorporated in the rating is the district's moderately-sized, stagnant tax base located in northeast Ohio (GO rated Aa1/stable outlook); its socioeconomic profile which approximates state income indices; the district's challenged election history; and its above average debt profile with below average principal amortization. The negative outlook reflects the district's forecasted negative General Fund cash balance trends, with reserves likely to be tremendously pressured in the near term absent new voter approved operating revenues.

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