Moodys.com
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 UNDELRYING A2 AND ENHANCED Aa3 RATINGS TO ATHENS AREA SCHOOL DISTRICT'S (PA) $10 MILLION GO BONDS, SERIES OF 2011

07 Jun 2011

Primary & Secondary Education
PA

Moody's Rating

ISSUE

UNDERLYING
RATING

RATING

General Obligation Bonds, Series of 2011

A2

Aa3

  Sale Amount

$9,995,000

  Expected Sale Date

06/14/11

  Rating Description

General Obligation Bonds

 

Opinion

NEW YORK, Jun 7, 2011 -- Moody's Investors Service has assigned an underlying A2 rating and an enhanced Aa3 rating with a negative outlook to Athens Area School District's (PA) $10 million general obligation bonds, Series of 2011. The bonds are secured by the district's unlimited tax pledge pursuant to the Commonwealth of Pennsylvania's Taxpayer Relief Act, also known as Special Session Act 1. Proceeds from the bonds will be used to refinance outstanding maturities of the district's Series of 2001 and 2006A bonds with a targeted net present value of savings of 2% with no extension of maturities.

SUMMARY RATING RATIONALE

The A2 underlying rating reflects the district's conservative financial management practices that have resulted in improved, but still-narrow reserve levels stable tax base with below-average wealth indicators, and above-average debt burden.

Assignment of the Aa3 enhanced rating and negative outlook reflects the additional bond security provided by the Commonwealth of Pennsylvania's Act 150 School District Intercept Program. The Act provides for undistributed state aid to be diverted to bond holders in the event of default. The timing of state aid payments relative to the timing of debt service payments is satisfactory for these bonds.

STRENGTHS

-Improving financial position and recent operating surpluses

-Stable tax base

CHALLENGES

-Continued improvement of financial position given likely declines in state aid

-Above average debt burden

DETAILED CREDIT DISCUSSION

IMPROVED RESERVES AFTER MULTI-YEAR OPERATING SURPLUSES

Moody's expects the district's financial position to remain adequate albeit narrow, over the near term given the district's demonstrated commitment to conservative financial planning and recent improvement of reserve levels. Since fiscal 2007, the district has consistently built up reserves as a part of its goal to reach a target of 8%. In Fiscal 2010, total unreserved General Fund balance equaled $1.1 million, or 3.6% of General Fund revenues, a considerable improvement from its fiscal 2007 low of $115,000, or 0.4% of revenues. Based on fiscal 2010 and 2011 results, management hopes to reach its goal within five years, but acknowledges possible delays due to likely declines in state aid, which currently represents 51.4% of General Fund revenues, and the allowable increases to its property tax levy (38.5% of revenues) under the state index.

The fiscal 2011 budget included a 2% increase in spending due to rising salary and benefit costs, and was funded by a 4.3% increase to property taxes, the maximum allowable under the state index. Based on year-to-date results, management expects a $250,000 operating surplus, primarily due to conservative assumptions of its pension payment. The recently-adopted fiscal 2012 budget includes a 2% property tax increase and 3.5% spending decrease ($1.2 million) to offset an anticipated $1.5 million (10%) decline in state aid. Decreases in spending will primarily include reductions in personnel costs. Going forward, the district will likely benefit from ongoing Marcellus Shale natural gas exploration through ongoing lease revenues and royalty payments; management has been conservative in their incorporation of these revenue sources to close future budget gaps in the coming years. Based on the management's current assumptions of likely state aid declines in fiscal 2013, minimal property tax increases allowable under the index, and increases to salary and benefit costs, the district expects to close an estimated $900,000 budget deficit to ensure ongoing structural balance and maintain its current financial position.

MODERATELY-SIZED TAX BASE; FUTURE GROWTH FROM NATURAL GAS EXPLORATION

The district's moderately-sized $768 million tax base is located in Bradford County, on the New York State line. Reflective largely of market appreciation, full value has averaged a 5.4% annual growth in the past five years. While future residential development is expected to be minimal, the district's tax base is expected to benefit the corporate expansion of the Chesapeake Energy Corporation (senior unsecured rating of Ba3/positive) and ongoing Marcellus Shale natural gas exploration by Chesapeake Energy. Reflective of the region, wealth and income indicators remain below state and national averages. Per capita personal income averaged 87% and 84% of state and national averages, respectively. Likewise, median family income similarly equaled 86% and 85% of state and national averages, respectively. Full value per capita is below average at $52,004.

ABOVE-AVERAGE DEBT BURDERN; MANAGEABLE CAPTIAL NEEDS

The district's direct debt burden is above average at 6.1% of market value and increases to 6.3% when the debt of overlapping county and local entities is include. The district's debt burden should moderate over time as the district has no borrowing plans. Amortization of principal is average, with 54.6% retired in 10 years.

Approximately $21.3 million (47%) of the district's outstanding debt is party to a basis swap with Morgan Stanley (Senior unsecured rating of A2 /negative) pertaining to its Series 2010 and 2006A bonds. The district pays a floating rate equivalent to the Bond Market Association Index (BMA) on a monthly basis and receives floating payments of 68% of LIBOR. For both swaps, early termination is optional for the district only. Termination by the counterparty depends on specified termination events, including deterioration of the rating of either party below Baa3, cross default of the district, and the failure of the state intercept program. As of June 3, 2011, the swaps had a mark-to-market valuation of negative $288,000. With this issuance, the district plans to terminate the swap on its 2006A bonds, paying the termination pay of approximately $175,000 with the upfront swap payments received at its origination which had been reserved outside the General Fund. If terminated, variable rate exposure would be a more manageable 22% of the district's overall debt.

WHAT COULD MAKE THE RATING GO UP

-Significant improvement of the underlying tax base

-Sizeable fund balance growth

WHAT COULD MAKE THE RATING GO DOWN

-Significant financial deterioration

-Severe tax base declines

KEY STATISTICS

2010 population (estimated): 14,779 (1% increase from 2000)

FY 2010 Full value: $768 million

Net direct debt as % of full value: 6.1%

Overall debt as % of full value: 6.3%

Per capita personal income as % of sate (% of nation): 87% (84%)

Median family income as % of state (% of nation): 85% (86%)

Full value per capita: $52,004

FY 2010 Total General Fund balance (% of General Fund Revenues): $1.4 million (4.3%)

FY 2010 Unreserved General Fund balance (% of General Fund Revenues): $1.1 million (3.6%)

PRINCIPAL METHODOLOGY USED

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

Dora Lee
Analyst
Public Finance Group
Moody's Investors Service

Jessica A. Lamendola
Backup Analyst
Public Finance Group
Moody's Investors Service

Geordie Thompson
Senior Credit Officer
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 UNDELRYING A2 AND ENHANCED Aa3 RATINGS TO ATHENS AREA SCHOOL DISTRICT'S (PA) $10 MILLION GO BONDS, SERIES OF 2011
No Related Data.
© 2020 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/OR ITS CREDIT RATINGS AFFILIATES ARE MOODY'S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MATERIALS, PRODUCTS, SERVICES AND INFORMATION PUBLISHED BY MOODY'S (COLLECTIVELY, "PUBLICATIONS") MAY INCLUDE SUCH  CURRENT OPINIONS. MOODY'S INVESTORS SERVICE 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 INVESTORS SERVICE CREDIT RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS, NON-CREDIT ASSESSMENTS ("ASSESSMENTS"), AND  OTHER 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. AND/OR ITS AFFILIATES. MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND  PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND  PUBLICATIONS DO NOT COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY'S ISSUES ITS CREDIT RATINGS, ASSESSMENTS AND OTHER OPINIONS AND PUBLISHES  ITS 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, ASSESSMENTS, OTHER OPINIONS, AND 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, ASSESSMENTS, OTHER OPINIONS OR  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.

MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND 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 its 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, ASSESSMENT, 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 credit rating, agreed to pay to Moody's Investors Service, Inc. for credit ratings opinions and services rendered by it fees ranging from $1,000 to approximately $2,700,000. MCO and Moody's investors Service also maintain policies and procedures to address the independence of Moody's Investors Service credit ratings and credit rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold credit ratings from Moody's Investors Service 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 credit rating, agreed to pay to MJKK or MSFJ (as applicable) for credit 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