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Rating Action:

Moody's assigns initial A1 to Liberty Center LSD, OH's GO bonds Ser. 2014

Global Credit Research - 17 Jul 2014

Aa2 stable enhanced also assigned to Series 2014 bonds

NOTE: On July 31, 2014, the press release was corrected as follows: The sale amount was changed to $19,415,000 from $18,510,000; in the first and seventh sentences of the first paragraph of the Opinion section, $18.5 million was changed to $19.4 million; in the sixth sentence of the first paragraph of the Opinion section, “and a refunding transaction” was added at the end of the sixth sentence. Revised release follows.

New York, July 17, 2014 --

Moody's Rating

Issue: General Obligation (Unlimited Tax) Classroom Facilities and School Improvement Bonds, Series 2014; Underlying Rating: A1; Enhanced Rating: Aa2; Sale Amount: $19,415,000; Expected Sale Date: 07-29-2014; Rating Description: General Obligation

Opinion

Moody's Investors Service has assigned an initial A1 underlying rating to Liberty Center Local School District's (OH) $19.4 million General Obligation (GO) Classroom Facilities and School Improvement Bonds, Series 2014. Concurrently, we have also assigned a Aa2 enhanced rating to the Series 2014 bonds. The district's GO bonds are secured by the district's general obligation unlimited tax (GOULT) pledge which benefits from a dedicated property tax levy that is unlimited as to rate or amount. Debt service on the bonds is additionally secured by the Ohio School District Credit Enhancement (OSDCE) program. The program's rating of Aa2 with a stable outlook is notched from the State of Ohio's (Aa1 stable) rating. Proceeds from the bonds will finance the district's portion of a school construction project and a refunding transaction. Post-sale, the district will have $20.0 million in GO debt outstanding, $19.4 million of which is rated by Moody's.

SUMMARY RATING RATIONALE

The A1 GO rating reflects the district's modestly sized and stable tax base; ample reserve levels; limited exposure to the levy cycle; strong and conservative management team which has demonstrated a willingness to reduce expenditures to balance operations; a high debt burden and exposure to underfunded state cost-sharing pension plans.

The Aa2 enhanced rating assigned to the Series 2014 bonds is notched one time below the State of Ohio's Aa1 GO rating and is also assigned a stable outlook. The enhanced rating is based on the programmatic rating, compliance with program requirements for timing of debt service payments, and satisfactory coverage of maximum annual debt service provided by interceptable state aid revenue, which the Ohio Office of Budget and Management estimates at 4.83 times.

STRENGTHS

- Stable financial operations supported by ample reserve levels

- Strong and conservative management team

CHALLENGES

- Tax base valuation smaller than similarly rated entities

- Exposure to poorly funded state cost-sharing pension plans

- High debt burden

WHAT COULD CHANGE THE RATING -- UP

- Significant expansion of the local tax base

- Moderation in district's pension exposure and debt burden

WHAT COULD CHANGE THE RATING -- DOWN

- Sustained declines in reserve levels

- Further leveraging of the tax base or increased fixed costs

WHAT COULD CHANGE THE ENHANCED RATING - UP

- Upward movement in the state of Ohio's general obligation rating

WHAT COULD CHANGE THE ENHANCED RATING - DOWN

- Downward movement in the state of Ohio's general obligation rating

- Weakening of Ohio School District Credit Enhancement program mechanics

PRINCIPAL METHODOLOGY

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 State Aid Intercept Programs and Financings: Pre and Post Default published in July 2013. 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.

Chandra Ghosal
Analyst
Public Finance Group
Moody's Investors Service, Inc.
100 N Riverside Plaza
Suite 2220
Chicago, IL 60606
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Matthew Butler
Asst Vice President - Analyst
Public Finance Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
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JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's assigns initial A1 to Liberty Center LSD, OH's GO bonds Ser. 2014
No Related Data.
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