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Fallbrook Union High School District, CA -- Moody's assigns Aa3 to Fallbrook UHSD, CA's 2022 Series C GOULT Bonds

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Rating Action: Moody's assigns Aa3 to Fallbrook UHSD, CA's 2022 Series C GOULT BondsGlobal Credit Research - 24 Feb 2022New York, February 24, 2022 -- Moody's Investors Service has assigned a Aa3 rating to Fallbrook Union High School District, CA's General Obligation Bonds, 2016 Election, 2022 Series C, expected to be issued in the amount of $24.0 million. Moody's maintains Aa3 ratings on the district's outstanding general obligation unlimited tax (GOULT) bonds and an A1 issuer rating. The issuer rating reflects the district's ability to repay debt and debt like obligations without consideration of any pledge, security, or structural features. Post issuance, the district will have approximately $42.9 million of total debt.RATINGS RATIONALEThe A1 issuer rating reflects the district's growing economy, slightly below-average resident income profile and stable enrollment. The rating reflects the district's healthy financial position that is expected to narrow through fiscal 2023 though remain satisfactory for the rating level. The rating further incorporates the district's elevated leverage and pension obligations, which will remain a financial pressure.The Aa3 rating on the district's GOULT bonds is one notch higher than the district's issuer rating. The one notch distinction reflects California school district GO bond security features that include the physical separation through a "lockbox" for pledged property tax collections and a security interest created by statute.RATING OUTLOOKOutlooks are usually not assigned to local government credits with this amount of debt.FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATING- Sustained increases in reserves and liquidity- Significant growth in resident income levelsFACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATING- Erosion of reserves or liquidity- Enrollment declines that pressure financial performanceLEGAL SECURITYGeneral obligation bonds are backed by an unlimited property tax pledge of all taxable property within the district boundaries. San Diego County, rather than the district, will levy, collect, and disburse the district's property taxes, including the portion constitutionally restricted to pay debt service on general obligation bonds.USE OF PROCEEDSThe 2016 Election, 2022 Series C GO bond proceeds will finance a variety of capital projects within the district including classroom modernization and expansion. The 2022 Series C bonds represent the final issuance of the $45 million authorization.PROFILEFallbrook Union High School District encompasses approximately 500 square miles in unincorporated San Diego County (Aaa stable) including the communities of Fallbrook, Rainbow, Camp Pendleton and the Naval Weapons Station Fallbrook. The district operates one comprehensive high school, one independent high school and one continuation high school. District enrollment in fiscal 2021 was 2,155.METHODOLOGYThe principal methodology used in this rating 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 http://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1288235.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. Madeline Atkins Lead Analyst REGIONAL_WEST Moody's Investors Service, Inc. 405 Howard Street Suite 300 San Francisco 94105 JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 Michael Wertz Additional Contact REGIONAL_NE 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 © 2022 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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