Moody's Investors Service said it has downgraded to A2 from A1 the underlying rating on Olivet Community School, Mich.'s general obligation unlimited tax debt.

Concurrently, Moody's has assigned an A2 rating to the district's $2.2 million 2013 refunding bonds (general obligation - unlimited tax).

Additionally, Moody's has assigned an Aa2 enhanced rating with a stable outlook to the Series 2013 bonds. Post-sale, the district will have $23.5 million in general obligation tax outstanding.

The bonds are secured by the district's general obligation unlimited tax pledge. Proceeds of the bonds will refund for savings certain maturities of the district's outstanding 2003 refunding bonds.

The downgrade to A2 reflects the district's small tax base that has experienced recent valuation declines, satisfactory financial operations with somewhat narrow liquidity, and an elevated debt burden with slow principal amortization.

The Aa2 enhanced rating and stable outlook is based on the additional security provided by the state's School Bond Qualification and Loan Program (SBQLP).

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