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Cambridge-Isanti I.S.D. 911, MN -- Moody's affirms Cambridge-Isanti I.S.D. 911, MN issuer rating at A1; outlook remains negative

·12 min read

Rating Action: Moody's affirms Cambridge-Isanti I.S.D. 911, MN issuer rating at A1; outlook remains negativeGlobal Credit Research - 18 Feb 2021New York, February 18, 2021 -- Moody's Investors Service has affirmed the underlying A1 issuer rating, the A1 rating on the district's outstanding general obligation unlimited tax (GOULT) bonds and A2 rating on the outstanding certificates of participation (COPs). The district has $43.5 million of rated GOULT bonds and $14.2 million of rated COPs outstanding. The outlook is negative.RATINGS RATIONALEThe A1 issuer rating, which reflects the district's standalone credit quality and ability to repay debt and debt like obligations, incorporates the district's growing economy located north of the Twin Cities metropolitan area. The rating also considers the district's narrow operating fund balance and the likelihood that it will remain narrow. In addition, the rating considers the district's moderate long-term liabilities that we expect to moderate and manageable fixed costs.The rating assigned to the district's general obligation bonds is equivalent to the A1 issuer rating based on the district's unlimited property tax that is dedicated to debt service.The A2 rating on the district's COPs is one notch below the issuer rating, reflecting the contingent nature of the pledge, which is subject to annual appropriation, and the more essential leased asset which is a school building.RATING OUTLOOKThe outlook remains negative reflecting the district's narrowed position and reliance on voters to approve an operating levy which voters rejected in 2020. While the district expects to increase reserves modestly due to budget cuts, we expect reserves to remain narrow without significant expenditure reductions or revenue enhancements.FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATINGS-Significant strengthening of operating reserves and available liquidity-Material reduction in debt and pension leverageFACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATINGS-Inability to maintain operating margin and improve reserves or available liquidity-Growth in the pension or debt burdensLEGAL SECURITYThe district's outstanding general obligation bonds are secured by the district's full faith and credit and pledge and authority to levy ad valorem property taxes to pay debt service without limit as to rate or amount.The outstanding COPs are secured by the district's pledge to make rental payments sufficient for annual debt service requirements, subject to annual appropriation.PROFILECambridge-Isanti ISD No. 911 is located 47 miles northwest of the Twin Cities metropolitan area, in Isanti (Aa3) and Chisago (Aa2) Counties and has a population of 28,750. The district is comprised of the cities of Cambridge, Isanti and all or parts of 13 townships. The district currently provides comprehensive educational programs to 4,895 students in pre-kindergarten through the twelfth grade.METHODOLOGYThe principal methodology used in these ratings was US K-12 Public School Districts Methodology published in January 2021 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBM_1202421. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.REGULATORY DISCLOSURESFor further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody's Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security 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.Moody's general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1243406.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. Maxwell Brekke Lead Analyst Regional PFG Chicago Moody's Investors Service, Inc. 100 N Riverside Plaza Suite 2220 Chicago 60606 US JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 Thomas Jacobs Additional Contact Regional PFG Northeast JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 Releasing Office: Moody's Investors Service, Inc. 250 Greenwich Street New York, NY 10007 U.S.A JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 © 2021 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.CREDIT RATINGS ISSUED BY MOODY'S CREDIT RATINGS AFFILIATES ARE THEIR CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MATERIALS, PRODUCTS, SERVICES AND INFORMATION PUBLISHED BY MOODY’S (COLLECTIVELY, “PUBLICATIONS”) MAY INCLUDE SUCH CURRENT OPINIONS. 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