Moody's Investors Service has downgraded to Baa1 from A2 to New London-Spicer Independent School District 345, Minn.'s long-term underlying general obligation rating, affecting approximately $2.4 million of rated GO debt outstanding.
Moody's also has assigned a Aa2 enhanced (MSDE) rating with negative outlook to the district's $505,000 general obligation refunding bonds, Series 2012B. Post-sale, the district has $10.6 million of outstanding GO debt, of which $2.4 million is rated by Moody's.
The bonds are secured by the district's general obligation unlimited tax pledge. Proceeds of the Series 2013A bonds will current refund for modest expected interest savings the district's outstanding Series 2005A bonds.
The Baa1 underlying rating reflects the district's moderately sized $1.4 billion tax base located approximately 40 miles south west of St. Cloud (GO rated Aa2); long-term trend of declining enrollment; challenged finances with negative fund balance in three of the last four fiscal years and substantially negative net cash; and modestly sized debt burden with no near-term plans for additional debt.
The assignment of enhanced Aa2 rating and negative outlook on the current issuance is due to the additional security provided by the State of Minnesota's School District Credit Enhancement Program (MSDE).
