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Carrizo Springs Consolidated I.S.D., TX -- Moody's assigns A1 UND/Aaa ENH to Carrizo Springs CISD, TX's GOULT bonds, assigns A1 issuer rating, outlook is stable

·12 min read

Rating Action: Moody's assigns A1 UND/Aaa ENH to Carrizo Springs CISD, TX's GOULT bonds, assigns A1 issuer rating, outlook is stableGlobal Credit Research - 05 Feb 2021New York, February 05, 2021 -- Moody's Investors Service has assigned an A1 issuer rating to Carrizo Springs Consolidated Independent School District, TX and a A1 general obligation unlimited tax (GOULT) rating to the district's $11.52 million Unlimited Tax Refunding Bonds, Taxable Series 2021. We also affirm the A1 rating on the district's $38.9 million outstanding general obligation debt, all of which is rated by Moody's. The outlook is stable.RATINGS RATIONALEThe A1 issuer rating, which reflects the district's fundamental general credit quality and ability to provide core services and repay debt and debt-like obligations, incorporates a strong financial position that will continue to be healthy for the next few years because the district is benefiting from stable property taxes and conservative budgeting practices. Leverage is below average and will remain so given limited plans for additional issuance. The full value per capita of the district is very strong, however the tax base has fluctuated significantly in the past given meaningful concentration in the oil and gas industry. The rating further reflects below average resident incomes and declining enrollment.The A1 general obligation bond rating is equivalent to the issuer rating, based on the pledge of an unlimited property tax that is dedicated for debt service and levied upon all taxable property within the district.The Aaa enhanced rating is based on the rating of the Texas Permanent School Fund and the structure and legal protections of the transaction which provide for timely payment by the PSF if necessary. Moody's currently rates the Texas Permanent School Fund Aaa stable.RATING OUTLOOKThe stable outlook reflects our expectation that the district will maintain a strong financial position despite continued fluctuations in the local economy due to changes in oil/gas production.FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATINGS- Diversification of the economic base- Improved enrollment trendFACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATINGS- Significant erosion of economic indicators- Substantial increase in long-term liabilitiesLEGAL SECURITYThe bonds are secured by a direct and continuing ad valorem tax levied by the district on all taxable property without limitation as to rate or amount. The bonds are further secured by the Texas Permanent School Fund's commitment to pay debt service if necessary.USE OF PROCEEDSBond proceeds will be used to refund certain portions of the district's outstanding bonds to achieve debt service savings.PROFILECarrizo Springs Consolidated ISD is in southwest Texas near the Mexican border and serves all of Dimmit County. The district's service area is rural, with a high reliance on oil/gas production. The district has an enrollment of approximately 2,100 students as of the 2020 school year and serves a total population of about 10,400.METHODOLOGY The principal methodology used in the underlying 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. The principal methodology used in the enhanced rating was Rating Transactions Based on the Credit Substitution Approach: Letter of Credit-backed, Insured and Guaranteed Debts published in May 2017 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1068154. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of these methodologies. 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. Catherine Nicolosi Lead Analyst Regional PFG Dallas Moody's Investors Service, Inc. Plaza Of The Americas 600 North Pearl St. Suite 2165 Dallas 75201 US JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 Nicolanne Serrano 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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