Moodys.com
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 UNDERLYING AND Aa1 ENHANCED RATINGS TO MORIARTY-EDGEWOOD SCHOOL DISTRICT NO. 8'S [NM] $2.5 MILLION GENERAL OBLIGATION SCHOOL BONDS, SERIES 2011; ENHANCED RATING BASED ON NEW MEXICO SCHOOL DISTRICT ENHANCEMENT PROGRAM

15 Nov 2010

A1 AFFECTS $27.3 MILLION IN PARITY DEBT, INCLUDING CURRENT SALE

Primary & Secondary Education
NM

Moody's Rating

ISSUE

UNDERLYING
RATING

RATING

General Obligation School Bonds, Series 2011

A1

Aa1

  Sale Amount

$2,500,000

  Expected Sale Date

11/16/10

  Rating Description

General Obligation Unlimited Tax/New Mexico School District Enhancement

 

Opinion

NEW YORK, Nov 15, 2010 -- Moody's Investors Service has assigned an A1 underlying rating to Moriarty-Edgewood School District No. 8's (NM) $2.5 million General Obligation School Bonds, Series 2011. Concurrently, we have affirmed the A1 underlying general obligation rating, affecting $24.8 million in outstanding parity debt. Proceeds from the current sale will finance the completion of a new middle school, library expansion, as well as roofing and parking improvements.

UNDERLYING RATING RATIONALE

The bonds are secured by ad valorem taxes that are levied against all taxable property within the district without limitation as to the rate or amount. The A1 rating reflects the district's moderately sized tax base, improved financial position facing near term operating pressures, and manageable debt profile.

ENHANCED RATING RATIONALE

In addition to the underlying rating, we have assigned a Aa1 enhanced rating to the bonds. Assignment of the Aa1 enhanced rating for the proposed transaction is based upon our assessment of the Post March 30, 2007 New Mexico School District Enhancement (NMSDE) Program and a review of the district's proposed financing.

PROGRAMMATIC ENHANCED RATING RATIONALE

The NMSDE Post-March 30, 2007 program demonstrates generally average to strong state commitment and program history as defined by the first factor of the intercept methodology published February 2008. The funds available for intercept are the current fiscal year's undistributed state aid (state equalization guarantee distribution, or SEG) to a school district. State oversight of the program is strong as school district budgets must be reviewed and approved by the New Mexico Department of Education (DOE). Upon issuance of its general obligation bonds, a school district must file with the New Mexico Department of Finance and Administration (DFA) a copy of the bond resolution, offering documents, and paying agent agreements as well as contact information. The state's oversight is further reflected in the NMSDE Post-March 30, 2007 authorizing legislation requirement that, if a debt service payment is made on behalf of a school district, the DOE will initiate an audit of the school district and assist in implementing measures to ensure that future payments will be made on a timely basis. Per authorizing statute, the state covenants that it will not repeal, revoke or rescind the provisions of the intercept statute or modify or amend it so as to limit or impair the rights and remedies granted by the statute, though modifications to the amount and timing of state aid payments would be permitted. The expectation of continued state support is strong as the intercept program benefits school capital financings, an essential public purpose. Though the program has never been utilized, the state has demonstrated strong commitment to school capital financings and the intercept program's mechanics should result in full and timely payment of debt service, if the program were to be invoked.

The NMSDE Post-March 30, 2007 program demonstrates generally average to strong program mechanics, the second factor of the intercept methodology. Intercept mechanics are established in statute and in an administrative policy document outlining implementation of the program. The mechanics of the intercept program direct the paying agent to notify the DFA if payment of principal or interest on school district general obligation bonds has not been received on the business day immediately prior to the date on which the payment is due. Upon notification by the paying agent and confirmation that the payment has not been made to the paying agent one business day prior to the due date, the DFA must forward from available funds (as described above) the amount due to the paying agent. The state has a history of passing budgets on time. Moody's therefore concludes that late budget passage likely will not be a factor placing at risk the availability of funds under the intercept program. Based on the overall assessment of program mechanics described above, Moody's categorizes program mechanics as generally average to strong. However, the one business day notification requirement regarding a missed debt service payment is considered to be a weak factor.

FINANCING LEVEL ENHANCED RATING RATIONALE

While Moody's has assigned a programmatic rating of Aa1, with a stable outlook to the NMSDE Post-March 30, 2007 program, rating actions on specific credits that benefit from the intercept program depend on the evaluation of each according to the additional rating factors for individual intercept financings, including the sufficiency of interceptable revenues as determined by specific coverage tests, the timing of the state's fiscal year as it relates to scheduled debt service payment dates and transaction structure, which will consider the role of the independent fiduciary and reserve fund.

The financing level rating rationale is based on an additional two factors; revenue sufficiency and transaction structure. Just as with the two factors considered for the programmatic rating, analysts score subfactors as strong, average or weak. Financings that achieve strong or average scores on a majority of subfactors will usually achieve ratings that are equivalent to the program level rating, whereas financings with weaker scores will be rated one or more notches lower than the program level rating.

Based on SEG budgeted for state fiscal year 2011, interceptable revenues from the state for Moriarty-Edgewood School District provide a satisfactory minimum of 4.49 times coverage of maximum periodic debt service. Further, state revenues provide an adequate minimum 4.12 times coverage when coverage is calculated without the benefit of the state's final monthly state aid payment within a fiscal year. This calculation serves as a stress test to evaluate the sufficiency of interceptable aid even if the state were to delay the final state aid payment within a fiscal year. The stability of state aid is rated as weak given recent mid-year cuts in state aid to address fiscal stress at the state level. However, this weakness is somewhat mitigated by a continued level of ample debt service coverage as previously discussed. There is no reason to believe that the district's allocation of state equalization aid would decline based on enrollment projections. The fact that SEG can be accelerated to make debt service payments, if necessary, is considered a strong credit factor. The fact that principal is scheduled to be paid in January, more than 90 days into the state's fiscal year is considered to be strong.

In terms of the transaction structure, the program requires the appointment of a third-party fiscal agent: Bank of Albuquerque N.A. for the current sale. The fiscal agent is required to notify the state if an intercept of SEG is required, a characteristic that is considered as average. While there is no debt service reserve fund, such a fund is not typically utilized to support intercept financings supporting school districts.

Since the financing factors for the proposed transaction are generally considered strong or average, Moody's has assigned an enhanced rating to the forthcoming transaction that is equivalent to the programmatic rating of Aa1 with a stable outlook.

FAVORABLE PROXIMITY TO ALBUQUERQUE MSA

The district is located in central New Mexico, approximately 35 miles east of the City of Albuquerque (rated Aa1), along Interstate Highway 40. District boundaries cover a large area and encompass the towns of Edgewood and Moriarty and portions of three separate counties. The district's economy is primarily based on farming and ranching, while the proximity to the Albuquerque metropolitan area has driven residential and commercial development. The district's full valuation increased 7.0% on average annually over the past five years, reaching $1.4 billion in fiscal 2011. Officials report the planned construction of a racetrack, casino and hotel complex in Moriarty that will add approximately $65 million to the tax base and employ approximately 1,000 personnel has been delayed due to issues with a gas pipeline located beneath the site; there is currently no timeline as to when the project will move forward.

The district's socioeconomic profile is average as measured by per capita income (from 2000 U.S. Census) that is 99.1% of the state. The August 2010 multi-county unemployment rate of 9.8% was higher than the state (8.4%) and the nation (9.5%) for the same time period. Despite increases in population evident by residential development, enrollment has consistently declined over the last ten years. Over the past five years, student enrollment has declined by a 3.2% average annual rate. However, management reports an increase of 35 students for the 2010-2011 academic year to 3,384; enrollment is projected to remain stable over the medium term.

IMPROVED FINANCIAL POSITION; PRESSURE REMAINS FROM STATE AID CUTS AND DECLINING ENROLLMENT

The district's financial position has significantly improved from a narrow $598,000 (2.2% of revenues) at the end of fiscal 2006. In fiscal 2007, the state granted the district one time emergency funds that are not required to be repaid. As a result, the district posted a surplus of $1.5 million, all of which is attributable to emergency funds from the state and a federal reimbursement. The surplus revenues resulted in a FYE 2007 General Fund balance of $2.1 million, or 7.4% of revenues. The district subsequently received a modest amount of emergency supplemental funds in fiscal 2008 to offset a shortfall in state aid revenues due to an unexpected decline in enrollment, which yielded a $450,000 surplus and an FYE 2008 General Fund balance of $2.6 million (9.2% of revenues). The district drew $150,000 from reserves in fiscal 2009 to cover one-time expenditures, including start up costs for an alternative graduation program and finance preventative maintenance capital projects. Fiscal 2010 resulted in a modest reduction in General Fund reserves due to $917,00 midyear cuts in state aid; the unaudited General Fund balance at FYE 2010 was $2.3 million. The district's operating revenues are largely derived from state aid (87%) and property taxes (12%). Although the fiscal 2011 budget is balanced, we believe the district will continue to face operating pressures due to potential state aid cuts and declining enrollment, likely requiring expenditure reductions to maintain reserves at a satisfactory level.

DEBT BURDENS NEAR STATUTORY MAXIMUM

New Mexico state statute caps school district debt issuance at 6% of assessed valuation. Inclusive of the current sale, the district's debt burdens are approaching this level. Given that assessed value is one-third of full value in New Mexico, the district's direct and overall debt burdens are 1.9% and 2.6%, respectively (both expressed as a percentage of fiscal 2011 full value). Amortization is rapid with 100% of principal retired by 2018.

The district has no remaining debt authorization, and officials report the possibility of holding a bond election in late-2011. Given the strict statutory debt limitations and favorable payout rate, we believe the district's debt profile will remain manageable over the long term.

KEY STATISTICS

2009-2010 Enrollment: 3,384

FY 2010 Full Value: $1.4 billion

Full Value per Capita: $109,799

Per Capita Income (2000 U.S. Census): $17,107 (99.1% of state; 79.2% of U.S.)

Direct Debt Burden: 1.9%

Overall Debt Burden: 2.6%

Principal Payout (10 years): 100%

FY 2009 General Fund Balance: $2.4 million (8.1% of General Fund revenues)

Post-sale Parity Debt Outstanding: $27.4 million

WHAT COULD CHANGE THE RATING-UP:

*Significant tax base expansion coupled with an improved demographic profile.

*Trend of operating surpluses resulting in improved financial reserves

WHAT COULD CHANGE THE RATING-DOWN:

*Substantial tax base contraction

*Depletion of financial reserves resulting in reduced financial flexibility

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

Leslie Lukens
Analyst
Public Finance Group
Moody's Investors Service

Michelle Smithen
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 UNDERLYING AND Aa1 ENHANCED RATINGS TO MORIARTY-EDGEWOOD SCHOOL DISTRICT NO. 8'S [NM] $2.5 MILLION GENERAL OBLIGATION SCHOOL BONDS, SERIES 2011; ENHANCED RATING BASED ON NEW MEXICO SCHOOL DISTRICT ENHANCEMENT PROGRAM
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.

​​​​​​
Moodys.com