Global Header | Moody's
Close
Please Note
We brought you to this page based on your search query. If this isn't what you are looking for, you can continue to Search Results for ""
The maximum number of items you can export is 3,000. Please reduce your list by using the filtering tool to the left.
Close
Close
Email Research
Recipient email addresses will not be used in mailing lists or redistributed.
Recipient's
Email

Use semicolon to separate each address, limit to 20 addresses.
Enter the
characters you see
Close
Email Research
Thank you for your interest in sharing Moody's Research. You have reached the daily limit of Research email sharings.
Close
Thank you!
You have successfully sent the research.
Please note: some research requires a paid subscription in order to access.
New Issue:

MOODY'S ASSIGNS A1 RATING TO LAREDO INDEPENDENT SCHOOL DISTRICTS (TX) $18.6 MILLION UNLIMITED TAX REFUNDING BONDS, SERIES 2011; Aaa ENHANCED RATING ASSIGNED BASED ON TX PSF GUARANTEE

15 Apr 2011

CONCURRENTLY, MOODY'S ALSO AFFIRMS THE A1 RATING ON THE DISTRICT'S OUTSTANDING PARITY DEBT AFFECTING $197 MILLION, AND THE A1 RATING ON THE DISTRICT'S PUBLIC PROPERTY FINANCE CONTRACTUAL OBLIGATIONS, SECURED BY A LIMITED TAX

Primary & Secondary Education
TX

Moody's Rating

ISSUE

UNDERLYING
RATING

RATING

Unlimited Tax Refunding Bonds, Series 2011

A1

Aaa

  Sale Amount

$18,590,000

  Expected Sale Date

04/19/11

  Rating Description

General Obligation Unlimited Tax/Texas PSF Enhanced Rating

 

Opinion

NEW YORK, Apr 15, 2011 -- Moody's Investors Service has assigned an A1 underlying rating to Laredo Independent School District's (TX) $18.6 million Unlimited Tax Refunding Bonds, Series 2011. Concurrently, Moody's affirms the A1 rating on the district's $197 million in outstanding parity debt, net of the current refunding. Moody's also affirms the A1 rating on the district's outstanding Public Property Finance Contractual Obligations, secured by a limited tax. In addition to the rating, we have assigned a Aaa enhanced rating to the current sale provided by a guarantee of the Texas Permanent School Fund (PSF). Proceeds from the sale of the bonds will be used to refund certain maturities of the district's Series 2001 bonds, for a net present value savings of approximately 7%. The refunding schedule reflects level savings with no extension of final maturity.

RATINGS RATIONALE - UNDERLYING

The bonds are secured by a continuing and direct annual ad valorem tax levied, without limitation as to rate or amount, on all taxable property within the district. The rating assignment and affirmation reflects the district's modestly rebounding tax base, following a sizable decline in fiscal year 2010, and history of financial management that has significantly improved reserve levels over the past years, positioning the district for the upcoming pressured financial environment, brought about by the state's budgetary challenges. It also reflects a leveraged debt profile, even when considering the effect of state aid for debt service, and socio economic indicators that remain well below the median.

RATINGS RATIONALE - ENHANCED

The Aaa rating reflects our assessment of the PSF's ability to make payments on the guarantee relative to the substantial value of the fund corpus. Additional credit considerations include: the PSF's constitutionally protected corpus, the general obligation credit quality of the Texas school district guaranteed by the fund, an investment portfolio that provides satisfactory coverage and liquidity given our estimated probability of calls on the guarantee, and strong legal mechanics that facilitate timely reimbursement to the PSF should guarantee payments occur. The enhanced rating also reflects an expected increase in PSF leverage to no more than 3.5 times PSF cost value. For additional information on the PSF program, please see Moody's High Profile Ratings Update "Texas Permanent School Fund (PSF)" dated April 2010.

DETAILED CREDIT DISCUSSION

TAXABLE VALUES APPEAR TO HAVE STABILIZED FOLLOWING SIGNIFICANT DECLINE

Located in Webb County (general obligation rating Aa3), approximately 150 miles southwest from San Antonio (general obligation rating Aaa/stable outlook) the district includes a major portion of the City of Laredo, bordering Mexico. Its local economy is diversified, with a mix of agriculture, mineral production, international trade and tourism. Taxable values within the district have historically exhibited steady growth, averaging 6.2% annually between fiscal years 2001 and 2009, fueled by a mix of residential and commercial construction, and revaluation. In fiscal year 2010, taxable values experienced significant contraction of 6.5%, to a total value of $2.1 billion as commercial values experienced moderate softness. Foreclosure activity however, has remained minimal with a rate of 0.4% reported in fiscal year 2010, up from the 0.3% in fiscal year 2009, indicating a relatively stable residential market. Despite the decline in 2010, taxable values appear to be rebounding with a modest increase of 0.3% in fiscal year 2011. No current economic activity is reported due to the district's mature base, and officials anticipate an increase in the future will come from revaluations, and revitalization projects. Moody's expects that taxable values will remain flat over the long term given limited availability of land.

Laredo ISD serves a predominantly economically disadvantaged population. As such, the average daily attendance (ADA), which drives school funding, has fluctuated with modest declines in three of the past four years, in line with enrollment levels. Over the past five years, ADA levels have remained flat on an average annual basis, despite some periods of growth and decline. Preliminary estimates for fiscal year 2011 indicate an increase of 0.7% in ADA levels due to aggressive initiatives pursued by the district to reduce truancy rates. Over the long term, officials expect that ADA levels will remain flat, with the possibility of an increase, due to in migration of residents from Mexico. Also due to its service area, the district exhibits significantly below average wealth indicators with a 1999 per capita income of $9,046, which is 46.1% of the state's, and 41.9% of the nation. The 1999 median family income was $24,425 or 53.3% of the state's, and 48.8% of the nation. While there is no data point that captures unemployment rates within the district, unemployment rates within Webb County have historically been higher than the state's, although the trend has changed with the recent economic downturn. In the past decade, the lowest rate of 4.8% was recorded in 2007, despite that still being higher than the state's 4.4%, and the nation's 4.6% taken about the same time. The unemployment rate in December 2010 was 8.1%, which was on par with the state's 8%, but much lower than the nation's 9.1% taken during the same time period.

OPERATING SURPLUSES REFLECTIVE OF SOUND FINANCIAL MANAGEMENT; PRESSURED FINANCIAL ENVIRONMENT ANTICIPATED DUE TO STATE'S BUDGETARY CHALLENGES

Moody's expects the district will continue its history of sound financial management, sufficient to preserve its current financial flexibility despite financial pressures anticipated in the near term. The district, like all others in the state, is preparing to enter a more challenging financial environment, brought about by the state's budgetary pressures. Although no reduction in current reserve levels is expected, future credit reviews will focus on management's ability to achieve balanced operations, while maintaining reserve levels. Over the past four years, officials have implemented several cost cutting measures that have eliminated positions and generated operating surpluses, improving reserve levels. The total General Fund balance grew to $59.4 million (28.7% of General Fund revenues) in fiscal year 2009, from $30.9 million (15.7% of General Fund revenues) in fiscal year 2007. In fiscal year 2010, the district's prudent financial practices, resulted in another operating surplus of $11.5 million, increasing the total General Fund balance to $70.9 million (a strong 34.2% of General Fund revenues). The unreserved undesignated portion was approximately $54 million (a still solid 26% of General Fund revenues). In fiscal year 2011, the district adopted a budget that appropriated approximately $1.4 million of reserves. However, officials indicate the budget is faring better than expected, and anticipated flat growth in the General Fund by the end of the year.

In fiscal year 2012, officials anticipate a reduction in state aid revenues due to the state's budgetary challenges. Although numbers have not been released from the governor's office, the district has proactively identified some measures that should help soften the impact of the cuts. For the General Fund, management has a financial model that includes a 15% reduction as a worst case scenario, based on proposals by the house and senate committees. Proposed measures include eliminating positions, and reducing the discretionary items on the budget. Officials do not believe reserve levels will be reduced as a result of the financial pressures. Moody's believes the district has a plan based on reasonable assumptions to manage the challenges expected for the next fiscal year.

Being a property poor district as defined by the state, Laredo ISD received majority of its fiscal year 2010 funding from state sources (79.1%), followed by local sources (12.4%), and federal sources (8%). The district's maintenance and operations (M and O) levy has remained at $10.40 per $1,000 of assessed values, the maximum without voter approval over the past four years, while debt service levy has remained at $2.34 per $1,000 of assessed values. The district can increase its M and O levy to a maximum of $11.70 per $1,000 of assessed values by seeking voter approval. Officials express that the current levy has been sufficient to fund operations, and do not anticipate calling a tax ratification election over the intermediate term.

LEVERAGED DEBT PROFILE, DESPITE SIGNIFICANT STATE AID FOR DEBT SERVICE

All of the district's debt is fixed rate and the district is not party to any derivative agreements. As a result of being a property poor district, Laredo ISD receives significant state aid, approximately 67%, to service debt. Despite the aid, the district's debt burdens still remain higher than similarly rated credits. Including lease revenue bonds issued by the Laredo ISD Public Facility Corporation, the districts debt burdens are elevated at 5.4% direct (9.9% overall) on a fiscal year 2011 full valuation basis when considering the effect of state aid. Excluding state aid, the burdens increase significantly, to a leveraged 14% direct (18% overall), also on a fiscal year 2011 full valuation basis. Debt is scheduled for an average retirement with 61% of principal retired in ten years. The district has no remaining authorized but unissued debt, and officials do not anticipate returning to voters for additional authorization. With an average amortization schedule, and no current plans for additional, Moody's expects the debt burdens will decrease over the long term, despite a leveraged position in the intermediate term.

KEY STATISTICS

2011 Full Valuation: $2.1 Billion

2011 Full Value per capita: $20,439

2000 Per Capita Income: $9,046 (46.1% of State)

Direct debt burden: 5.4% (including state aid)

Overall debt burden: 9.9% (including state aid)

Principal payout (10 years): 61%

2010 General Fund Balance: $70.9 Million (34.2% of General Fund revenues)

Post sale general obligation parity debt: $215.4 Million

PRINCIPAL METHODOLOGY

The principal methodology used in this rating was General Obligation Bonds Issued by U.S. Local Governments published in October 2009.

REGULATORY DISCLOSURES

Information sources used to prepare the credit rating are the following: parties involved in the ratings, parties not involved in the ratings, and public information.

Moody's Investors Service considers the quality of information available on the credit satisfactory for the purposes of assigning a credit rating.

Moody's adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources Moody's considers to be reliable including, when appropriate, independent third-party sources. However, Moody's is not an auditor and cannot in every instance independently verify or validate information received in the rating process.

Please see ratings tab on the issuer/entity page on Moodys.com for the last rating action and the rating history.

The date on which some Credit Ratings were first released goes back to a time before Moody's Investors Service's Credit Ratings were fully digitized and accurate data may not be available. Consequently, Moody's Investors Service provides a date that it believes is the most reliable and accurate based on the information that is available to it. Please see the ratings disclosure page on our website www.moodys.com for further information.

Please see the Credit Policy page on Moodys.com for the methodologies used in determining ratings, further information on the meaning of each rating category and the definition of default and recovery.

Analysts

Adebola Kushimo
Analyst
Public Finance Group
Moody's Investors Service

Kristin Button
Backup Analyst
Public Finance Group
Moody's Investors Service

Contacts

Journalists: (212) 553-0376
Research Clients: (212) 553-1653


Moody's Investors Service
250 Greenwich Street
New York, NY 10007
USA

MOODY'S ASSIGNS A1 RATING TO LAREDO INDEPENDENT SCHOOL DISTRICTS (TX) $18.6 MILLION UNLIMITED TAX REFUNDING BONDS, SERIES 2011; Aaa ENHANCED RATING ASSIGNED BASED ON TX PSF GUARANTEE
No Related Data.
© 2019 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.

CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. AND ITS RATINGS AFFILIATES (“MIS”) ARE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MOODY’S PUBLICATIONS MAY INCLUDE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. MOODY’S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE MOODY’S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY’S RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS AND MOODY’S OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY’S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. CREDIT RATINGS AND MOODY’S PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. NEITHER CREDIT RATINGS NOR MOODY’S PUBLICATIONS COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS AND PUBLISHES MOODY’S PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.

MOODY’S CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY’S CREDIT RATINGS OR MOODY’S PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER.

ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY’S PRIOR WRITTEN CONSENT.

CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM IS DEFINED FOR REGULATORY PURPOSES AND MUST NOT BE USED IN ANY WAY THAT COULD RESULT IN THEM BEING CONSIDERED A BENCHMARK.

All information contained herein is obtained by MOODY’S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided “AS IS” without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY’S is not an auditor and cannot in every instance independently verify or validate information received in the rating process or in preparing the Moody’s publications.

To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use any such information, even if MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such losses or damages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of a particular credit rating assigned by MOODY’S.

To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability for any direct or compensatory losses or damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud, willful misconduct or any other type of liability that, for the avoidance of doubt, by law cannot be excluded) on the part of, or any contingency within or beyond the control of, MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information.

NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY CREDIT RATING OR OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY’S IN ANY FORM OR MANNER WHATSOEVER.

Moody’s Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody’s Corporation (“MCO”), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody’s Investors Service, Inc. have, prior to assignment of any rating, agreed to pay to Moody’s Investors Service, Inc. for ratings opinions and services rendered by it fees ranging from $1,000 to approximately $2,700,000. MCO and MIS also maintain policies and procedures to address the independence of MIS’s ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading “Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy.”

Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY’S affiliate, Moody’s Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody’s Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to “wholesale clients” within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY’S that you are, or are accessing the document as a representative of, a “wholesale client” and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to “retail clients” within the meaning of section 761G of the Corporations Act 2001. MOODY’S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors.

Additional terms for Japan only: Moody's Japan K.K. (“MJKK”) is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody’s Overseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody’s SF Japan K.K. (“MSFJ”) is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization (“NRSRO”). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.

MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any rating, agreed to pay to MJKK or MSFJ (as applicable) for ratings opinions and services rendered by it fees ranging from JPY125,000 to approximately JPY250,000,000.

MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.

​​​​
Global Footer | Moody's