CHICAGO - Wisconsin's Kenosha Unified School District No. 1 could face a downgrade of its A1 credit from Moody's Investors Service due to the fiscal strain of dealing with a faltering investment in a complex transaction that involved collateralized debt obligations and a credit default swap.

The move by Moody's to revise its outlook on the credit follows similar action taken about two weeks ago on the outlook for the Waukesha School District's A1 rating. The two are among five southeastern Wisconsin districts that entered into the investment transaction two years ago to help fund a portion of their other post-employment benefit liabilities All five have joined together to hire legal advisers and are considering litigation against the financial firms that floated and executed the deals.

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