A1 enhanced rating assigned to the Bonds
New York, May 08, 2013 --
Moody's Ratings
Issue: Refunding Bonds; Underlying: A3; Enhanced
Rating: A1; Sale Amount: $3,835,000;
Expected Sale Date: 05/17/2013; Rating Description: General
Obligation Limited Tax
Opinion
Moody's Investors Service has assigned an A3 underlying rating to Mount
Vernon - Enola School District No. 41's (AR) $3.83
million Refunding Bonds. Concurrently, Moody's assigns
an A1 enhanced rating assigned to the Bonds.
SUMMARY RATINGS RATIONALE -- UNDERLYING
The Bonds are limited General Obligations of the district, secured
by a pledge of the proceeds of a continuing debt service tax voted specifically
for the payment of the 2009 Bonds as well as surplus revenues derived
from debt service taxes that may legally be used for the purpose of paying
the principal and interest on the Bonds. The tax specifically voted
for payment of the Bonds is a tax of 16.01 mills on the dollar
of the assessed valuation of taxable property in the district.
The underlying rating of A3 reflects the district's small rural
tax base, sound financial performance, modest reserves on
a dollar basis, and an average debt burden. Proceeds from
the sale of Bonds will refund certain maturities of the district's
outstanding debt for a projected net present value savings with no extension
of the final maturity.
SUMMARY RATINGS RATIONALE - ENHANCED
The A1 enhanced rating reflects Moody's assessment of the Arkansas School
District Enhancement Program under the methodology, "State
Aid Intercept Programs and Financings: Pre and Post Default."
Credit considerations include availability of funds, timing of state
aid payments, state aid trend, strength of notification requirement,
and timing between notification and intercept. Additional credit
considerations include a debt service coverage ratio (DSCR) that exceeds
1.5 times and the underlying rating of the district.
STRENGTHS - UNDERLYING
* Stable financial performance
* Manageable debt burden with no near-term borrowing plans
STRENGTH -- ENHANCED
* Solid trend of state aid and state aid payments
CHALLENGES - UNDERLYING
* Small rural tax base
* Modest reserve position on a dollar basis
CHALLENGES -- ENHANCED
* Vagueness of program timing and mechanics
WHAT COULD MAKE THE UNDERLYING RATING GO UP
* Significant growth and diversification of tax base
* Maintenance of satisfactory financial operations and growth in reserves
in line with growth in budget
WHAT COULD MAKE THE UNDERLYING RATING GO DOWN
* Contraction of assessed valuation
* Weak financial performance leading to narrowing of reserves
* Trend of declines in enrollment
WHAT COULD MAKE THE ENHANCED RATING GO UP
* An upgrade of the district's underlying rating
WHAT COULD MAKE THE ENHANCED RATING GO DOWN
* A downgrade of the district's underlying rating or a downgrade
of the State of Arkansas' rating
PRINCIPAL METHODOLOGIES
The principal methodology used in the underlying rating was General Obligation
Bonds Issued by US Local Governments published in April 2013. The
principal methodology used in the enhanced rating was State Aid Intercept
Programs and Financings: Pre and Post Default published in April
2013. Please see the Credit Policy page on www.moodys.com
for a copy of these methodologies.
REGULATORY DISCLOSURES
For ratings issued on a program, series or category/class of debt,
this announcement provides certain regulatory disclosures in relation
to each rating of a subsequently issued bond or note of the same series
or category/class of debt or pursuant to a program for which the ratings
are derived exclusively from existing ratings in accordance with Moody's
rating practices. For ratings issued on a support provider,
this announcement provides certain regulatory disclosures in relation
to the rating action on the support provider and in relation to each particular
rating action for securities that derive their credit ratings from the
support provider's credit rating. For provisional ratings,
this announcement provides certain regulatory disclosures in relation
to the provisional rating assigned, and in relation to a definitive
rating that may be assigned subsequent to the final issuance of the debt,
in each case where the transaction structure and terms have not changed
prior to the assignment of the definitive rating in a manner that would
have affected the rating. For further information please see the
ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.
Please see www.moodys.com for any updates on changes to
the lead rating analyst and to the Moody's legal entity that has issued
the rating.
Please see the ratings tab on the issuer/entity page on www.moodys.com
for additional regulatory disclosures for each credit rating.
James Hobbs
Analyst
Public Finance Group
Moody's Investors Service, Inc.
600 North Pearl Street
Suite 2165
Dallas, TX 75201
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Toby Cook
Vice President - Senior Analyst
Public Finance Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Moody's assigns A3 underlying rating to Mount Vernon - Enola School District No. 41's (AR) $3.83 million Refunding Bonds