CHICAGO - Wisconsin's Waukesha School District could face a downgrade in its A1 credit from Moody's Investors Service as it grapples with the fiscal strain of dealing with a faltering investment in a complex transaction that involved collateralized debt obligations and a credit default swap.

Waukesha is one of five districts that invested in the CDOs. All are weighing litigation against the financial firms they believe misrepresented the safety of the complex investment transaction intended to help fund a portion of their other post-employment benefit liabilities.

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