New York, June 08, 2016 -- Issue: Unlimited Tax General Obligation Bonds, 2016; Rating: Aa2; Rating Type: Underlying LT; Sale Amount: $33,240,000; Expected Sale Date: 06/15/2016; Rating Description: General Obligation;
Issue: Unlimited Tax General Obligation Bonds, 2016; Rating: Aa1; Rating Type: Enhanced LT; Sale Amount: $33,240,000; Expected Sale Date: 06/15/2016; Rating Description: General Obligation;
Summary Rating Rationale
Moody's Investors Service has assigned a Aa2 to North Thurston Public Schools, Washington's Unlimited Tax General Obligation Bonds, 2016 expected to be issued in the amount of $33.2 million. The bonds will also receive the Aa1 enhancement rating of the Washington State School Bond Guarantee Program. At the same time, Moody's has affirmed the Aa2 rating on the district's outstanding general obligation debt. Post-issuance, the district is expected to have $219.7 million in outstanding parity debt.
The Aa2 underlying rating reflects the district's large tax base, a stable economy anchored by federal and state government employers, an average socioeconomic profile, and adequate reserves. The rating also incorporates a somewhat elevated but manageable debt burden, as well as the strength of the Washington school district general obligation pledge.
The Aa1 enhancement rating is based upon the assumption that the bonds will qualify for, and be backed by, the Washington State School Bond Guarantee Program. Under this program, the state pledges its full faith, credit, and taxing power to guarantee debt service when due on qualified school districts' voter-approved general obligation bonds. The program rating reflects the pledge of the State of Washington (Aa1 stable), strong state oversight of local school districts, and strong program mechanics.
Outlooks are usually not assigned to local governments with this amount of debt outstanding.
Factors that Could Lead to an Upgrade
Material and sustained improvement in the district's financial position compared to national medians
Improvement in the district's socioeconomic profile
Factors that Could Lead to a Downgrade
Substantial declines in the tax base
Declines in the district's reserves
The current offering is secured by the district's full faith, credit, and unlimited property tax pledge.
The Washington State School Bond Guaranty Program pledges its full faith and credit to make whole any shortfall in debt service by the district, if necessary, on a timely basis for payment to bondholders.
Use of Proceeds
The proceeds of the bonds will be used to construct, equip, renovate and make certain capital improvements to the various facilities of the district, as well as pay the cost of issuance.
The district is located in Thurston County, near the southern end of Puget Sound and primarily serves residents of the City of Lacey, as well as a small portion of the city of Olympia. The district has an estimated population of 98,880, and encompasses approximately 74 square miles. The District serves approximately 14,300 students, as of 2016, and operates 13 elementary schools, four middle schools, and four high schools.
The principal methodology used in the underlying rating was US Local Government General Obligation Debt published in January 2014. The principal methodology used in the enhanced rating was US States Rating Methodology published in April 2013. Please see the Ratings Methodologies page on www.moodys.com for a copy of these methodologies.
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 credit rating action on the support provider and in relation to each particular credit 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.
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the lead rating analyst and to the Moody's legal entity that has issued
Please see the ratings tab on the issuer/entity page on www.moodys.com
for additional regulatory disclosures for each credit rating.
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Moody's assigns Aa2 underlying rating North Thurston Public Schools, WA's GO bonds
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