Moody's Investors Service has assigned a Aa1 rating to $58.6 million of Virginia Public School Authority notes selling competitively today.
The school educational technology notes, Series IV, are secured by revenues from the state's Literary Fund, and are subject to appropriation by lawmakers if the fund's revenues are insufficient to pay debt service. The authority has covenanted to work with the governor to include debt service for the notes in his biennial budget request to the General Assembly.
The debt is "appropriation-backed so there's slightly more risk than with traditional" general obligation bonds], said Caroline Cruise, assistant vice president at Moody's. Proceeds from the note sale will be used to buy computers for high schools and to pay for improved access to the Internet.
Moody's said the rating "incorporates the credit strength of the commonwealth of Virginia, the limited nature of the commonwealth's payment obligation, and the use of bond proceeds for equipping its local educational institutions, a long-standing state function. Also considered is the short life (five years) of the debt, in line with that of the technology financed."
Both Standard & Poor's and Fitch Ratings rate the notes AA-plus.
