In a subscription-only story published this morning, The Bond Buyer notes that both Moody's Investors Service and Standard & Poor's have downgraded their ratings of the Dallas Independent School District. Both still consider the district a relatively safe investment, but the downgrades reflect an added note of concern, as evidenced by the comments below. One reason: The district's recently announced plans to borrow $100 million just to cover next year's expenses since there ain't no reserves in the reserve, a result of prolonged budget problems. And that doesn't look good when you're expected to go to market over the next three years with more than $900 million in bonds left to be sold from the $1.35-billion '08 election.
Writes Jason Philyaw:
Moody's lowered its rating on DISD's $1.7 billion of debt outstanding to A1 from Aa3, citing "ongoing concerns regarding the reduction in financial flexibility that is a product of structurally unbalanced budgets, as well as the district's financial reporting shortcomings." The agency assigned the A1 rating to the upcoming sale and revised its outlook to stable at the lower rating from negative at the Aa3 rating. Moody's analysts said the downgrade also reflects the district's "substantial future borrowing plans." ...
Standard & Poor's pushed its rating down to A-plus with a negative outlook from AA-minus due to "the district's continued financial deterioration." The lowered ratings also apply to DISD's sale of $105.1 million of general obligation refunding bonds that may price as early as next week. Fitch Ratings assigned a AA-minus rating to the refunding and said the financial profile of the second-largest school system in Texas "has deteriorated due to an unanticipated significant drawdown in reserves in fiscal 2008."
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