Bangkok--8 Jul--Standard & Poor's
Standard & Poor's Ratings Services raised its underlying rating (SPUR) on Logan County School District No. Re-1, Colo.'s general obligation (GO) bonds to 'A+' from 'A'. At the same time, Standard & Poor's assigned its 'AA-' enhanced rating and 'A+' issuer credit rating (ICR), and stable outlook, to the district's series 2009 GO refunding bonds.
"We base the upgrade on the district's good financial performance, including strong unreserved fund balance levels, in addition to more stable enrollment in the past couple of years following a period of decline," said Standard & Poor's credit analyst Timothy Barrett.
The enhanced rating reflects the state aid withholding provision created under State of Colorado Revised Statutes, Section 22-41-110. Under this provision, if the school district indicates it will not make full payment on the bonds, the state treasurer will forward to the paying agent the amount necessary in immediately available funds to be applied only to debt service.
The ICR reflects our view of the district's general credit characteristics including its:
Sound finances, with historically strong fund balance levels that now equal 19.7% of general fund expenditures;
Historically low unemployment, with a junior college and prison providing stable government employment; and Low debt levels.
"The stable outlook on the enhanced rating reflects what we view as the strength of the state aid intercept structure. The stable outlook on the ICR reflects our expectation that the district will maintain a sound unreserved fund balance to guard against revenue fluctuations, which could potentially result from changes in enrollment," Mr. Barrett added.
Offsetting these strengths in our opinion are a local economy concentrated in the agricultural industry, but which has begun to diversify into other industries and has adequate wealth and income indicators; and declining student enrollment that has decreased by 8.5% in four years since the 2000-2001 school year but which has started to stabilize in the past two fiscal years.
The district's full faith and credit GO pledge secures the electorate-approved bonds. Officials will use bond proceeds to refund a portion of the district's series 2006 GO bonds outstanding.
Logan County School District No. Re-1, with an estimated population of 19,000, is in northeast Colorado.
RELATED RESEARCH
USPF Criteria: "GO Debt," Oct. 12, 2006
USPF Criteria: "Methodology And Assumptions: Rating Unlimited Property Tax Basic Infrastructure Districts," March 17, 2009
Complete ratings information is available to RatingsDirect subscribers at www.ratingsdirect.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com; select your preferred country or region, then Ratings in the left navigation bar, followed by Find a Rating.
Media Contact:
Ana Sandoval, New York (1) 212-438-5095, [email protected]
Analyst Contacts:
Timothy Barrett, New York (1) 212-438-6327
Matthew Reining, San Francisco (1) 415-371-5044