Fitch Ratings said it has downgraded to BB-plus from BBB-minus the rating on $8.4 million charter school revenue bonds, series 2010 issued by the Industrial Development Authority of the County of Pima, Ariz., on behalf of Cambridge Academy East.

The rating outlook is revised to negative from stable.

The downgrade reflects primarily CAE's negative margin for fiscal 2011 and expectation for stressed performance to continue into fiscal 2012, sustained operating pressure with declining state funding levels and slower than expected enrollment ramp up.

Fitch recently published an exposure draft of the charter school rating criteria. The draft includes a number of proposed amendments to existing criteria. If applied in the proposed form, the exposure draft would trigger a substantial number of downgrades to existing charter school ratings.

After the exposure draft comment period and upon the publication of the new criteria, Fitch expects to place on Rating Watch Negative those schools it views at risk of downgrades, which could include all charter school ratings. Fitch would then conduct full rating reviews for those schools over the following six months, utilizing the new criteria.

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