NEW YORK - Moody's Investors Service said it has downgraded to A1 from Aa3 the underlying rating on Newaygo Public Schools, Mich., general obligation debt in conjunction with the district's sale of $1.5 million general obligation unlimited tax school improvement bonds, Series 2012.
Concurrently, Moody's has assigned a Aa2 enhanced rating with stable outlook to the current issue. Post-sale, the district will have $19.7 million of general obligation unlimited tax debt outstanding.
Debt service on the bonds is secured by the district's general obligation unlimited tax pledge and proceeds from the current issue will be used to finance technology improvements at the district's school facilities.
Assignment of the A1 underlying rating reflects the district's modest tax base in western Michigan (general obligation rated Aa2/stable outlook) that has experienced a series of declines in its full market valuation, significant narrowing of financial reserves in recent years, continued enrollment declines over the past decade, and manageable debt burden.
The Aa2 enhanced rating and stable outlook is due to the additional security provided by the State of Michigan's School Bond Qualification and Loan Program.