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Rating Action:

Moody's downgrades Clark County SD, NV Limited Tax GO rating to A1; Outlook is stable

Global Credit Research - 10 Jul 2013

$3.3 billion in debt affected

New York, July 10, 2013 --

Moody's Rating

Issue: General Obligation (Limited Tax) Medium - Term Bonds Series 2013A; Rating: A1; Sale Amount: $31,825,000; Expected Sale Date: 7/16/2013; Rating Description: General Obligation Limited Tax

Issue: General Obligation (Limited Tax) Refunding Bonds, Series 2013B; Rating: A1; Sale Amount: $98,845,000; Expected Sale Date: 7/16/2013; Rating Description: General Obligation Limited Tax

Opinion

Moody's Investors Service has downgraded Clark County School District, Nevada's General Obligation Limited Tax rating to A1 from Aa3 in conjunction with the anticipated sale of its General Obligation (Limited Tax) Medium-Term Bonds Series 2013A and General Obligation (Limited Tax) Refunding Bonds Series 2013B. The outlook on the district's bonds is stable. At this time, Moody's also downgrades to A1 the district's outstanding parity limited tax general obligation debt totaling an additional $3.1 billion. The bonds are secured by the full faith and credit of the district within the constitutional limitations of the district's operating rate and its dedicated debt service tax rate of approximately $5.534 per $1,000 of assessed valuation. The series 2013A bonds will be used to fund purchases of buses and technology districtwide. The series 2013B bonds will be used to refund certain outstanding maturities of the district's series 2003D, 2004D and 2005C bonds.

SUMMARY RATING RATIONALE

The downgrade reflects the district's weakened financial position relative to large school districts nationwide, continued insufficient coverage of limited tax debt service from property tax levies with limited levy raising ability, and ongoing though diminished operational imbalance. The ratings also reflect the district's favorable long-term credit characteristics including a substantial tax base, history of outperforming otherwise unfavorable budgets, moderate debt burden, rapid amortization of principal, and statutorily-mandated debt service reserves.

The stable outlook reflects the expectation that the district's financial performance and ability to achieve sum sufficient debt service coverage from property tax revenues will remain challenged as officials manage an era of limited operating flexibility. Additionally, Moody's expects that given rapid debt amortization, the district has ample opportunity and market access to manage its debt service levy through debt restructuring.

STRENGTHS

- Substantial tax base beginning to recover from a very large recessionary contraction

- Rapid payout of debt

CHALLENGES

- Depressed tax base challenges the district's ability to meet annual debt service solely from property tax levy revenues

- State and local economy heavily reliant on tourism, with continued depression in residential construction

- Substantial declines in formerly ample debt service reserves

Outlook

The stable outlook reflects the expectation that the district's financial performance and ability to achieve sum sufficient debt service coverage from property tax revenues will remain challenged as officials manage an era of limited operating flexibility. Additionally, Moody's expects that given rapid debt amortization, the district has ample opportunity and market access to manage its debt service levy through debt refinancing.

WHAT COULD MAKE THE RATING GO UP

- Significant improvement in operating revenues, cost containment, and maintenance of reserve levels favorable to peer-rated large school districts

- Trend of self-support of limited tax obligations from dedicated property taxes

- Prolonged stabilization of local economy and increase in tax base

- Significant reduction in outstanding debt

WHAT COULD MAKE THE RATING GO DOWN

- Significant budgetary imbalances resulting in further drawdown of reserves

- Continued, significant declines in assessed value

- Increased economic volatility resulting in stalled recovery

The principal methodology used in this rating was General Obligation Bonds Issued by US Local Governments published in April 2013. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.

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.

Bryan A. Quevedo
Analyst
Public Finance Group
Moody's Investors Service, Inc.
One Front Street
Suite 1900
San Francisco, CA 94111
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

William Oh
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 downgrades Clark County SD, NV Limited Tax GO rating to A1; Outlook is stable
No Related Data.

 

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