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Rating Action:

Moody's Upgrades Hillsborough Co. S.D. (FL) Sales Tax bonds to A2 from A3; outlook revised to stable

Global Credit Research - 16 Apr 2014

Affirms Aa1 Issuer and Aa2 COP ratings; outlooks are stable

New York, April 16, 2014 -- Moody's Investors Service has upgraded the rating on Hillsborough County School District's (FL) infrastructure sale surtax bonds to A2 from A3. The outlook is revised to stable from negative. At the same time, we have affirmed the District's Aa1 Issuer rating, as well as the Aa2 rating on Hillsborough County School Board's (FL) Certificates of Participation (COPs) issued under a master lease. The outlooks on the Issuer rating and the School Board's COPs are both stable.

The sales tax bonds are secured by the district's share of a county-wide half-cent infrastructure sales surtax, approved by the voters for 30 years commencing December 1, 1996 to December 1, 2026, which coincides with the final maturity of the bonds. The COPs are secured by the board's annually-appropriated lease payments.

Legal provisions for the sales surtax bonds are adequate with a 120% additional bonds test and a debt service reserve funded with a surety from a non-rated provider. The COPs have no debt service reserves.

SUMMARY RATING RATIONALE

The A2 rating and upgrade are based on evidence of the sustained improvement in sales tax receipts and the adequate debt service coverage, as well as excess sales tax collections retained as a separate reserve. The Aa2 rating for the COPs reflects the favorable legal protections provided through use of a master lease that enhances the incentive to appropriate, the availability of a separate financing source for payment of debt service, and the manageable capital program with additional capital spending financed primarily through the district's capital outlay levy (1.5 mills). The Aa1 Issuer Rating of the district reflects Moody's assessment of the district's implicit general obligation credit strength. The district has no general obligation bonds outstanding at this time.

The Aa2 COP rating and Aa1 Issuer Rating are also based on the sizable and diverse tax base, solid financial operations with favorable cash and reserve positions, and strong management of its significant capital needs.

The stable outlooks on each security reflect the district's stabilizing and improving tax and economic base, and adequate levels of cash and reserves despite reductions in recent years.

STRENGTHS

-Sound management with good long-term capital and financial planning

-Favorable financial position

- Recovering economy

CHALLENGES

-Maintaining structural balance

-Limited available capital funds

OUTLOOK

The stable outlooks on each security reflect the district's stabilizing and improving tax and economic base, and adequate levels of cash and reserves which have been reduced in recent years.

WHAT COULD MAKE THE RATINGS GO UP:

SALES TAX:

- Improved collections and debt service coverage

ISSUER AND COPS:

-Improved equity and liquidity

-Improved and more reliable funding of operations and capital

WHAT COULD MAKE THE RATINGS GO DOWN:

SALES TAX:

-Deterioration of collections and/or coverage

ISSUER AND COPS:

-Deteriorated financial position

-Declines in capital funds for lease payments

-Deterioration of economic conditions

The principal methodology used in the issuer rating was US Local Government General Obligation Debt published in January 2014. The principal methodology used in the lease rating was The Fundamentals of Credit Analysis for Lease-Backed Municipal Obligations published in December 2011. The principal methodology used in the special tax rating was US Public Finance Special Tax Methodology published in January 2014. 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.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

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.

John I Incorvaia
Senior Vice President
Public Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Julie A Beglin
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 Upgrades Hillsborough Co. S.D. (FL) Sales Tax bonds to A2 from A3; outlook revised to stable
No Related Data.
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