LOS ANGELES — Moody's Investors Service downgraded two series of Poway Unified School District, Calif. general obligation bonds to Aa3.

The downgrade affects Poway USD's 2002-1 School Facilities Improvement District GO bonds and 2007-1 School Facilities Improvement District GO bonds, totaling $341.7 million. The ratings drop reflects the school district's weakening financial position in fiscal 2015 and fiscal 2016, according to the June 10 Moody's report.

The school district also has $62.5 million in lease revenue bonds, which are unrated, but were considered in Moody's analysis.

The school district landed in an unwelcome spotlight when critics of capital appreciation bonds singled it out as an example of a borrower paying a high amount of interest over time relative to the amount borrowed.

The rating incorporates the risks of the district's slow principal payout and escalating debt service, according to Moody's. The rating also reflects the strength of the voter-approved, unlimited property tax pledge that secures these bonds.

"We have removed the negative outlook as we expect the district's GO rating to stabilize at the new, lower level," Moody's analysts wrote. No outlook was assigned as they are not usually assigned to local government credits with this amount of debt outstanding, Moody's said.

The school district serves residents in the cities of Poway and San Diego, and unincorporated portions of San Diego County. The two school improvement districts encompass about two-thirds the total district.

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