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Perry Local School District (Stark Co.), OH -- Moody's assigns an enhanced Aa2 rating to Perry Local School District (Stark Co.), OH's GO bonds

·12 mins read

Rating Action: Moody's assigns an enhanced Aa2 rating to Perry Local School District (Stark Co.), OH's GO bonds

Global Credit Research - 01 Sep 2020

New York, September 01, 2020 -- Moody's Investors Service assigns an enhanced Aa2 rating to Perry Local School District (Stark County), OH's $58.4 million General Obligation (Unlimited Tax) School Improvement Bonds, Series 2020. The rating is based on the bonds' qualification to the State of Ohio's (Aa1 stable) School District Credit Enhancement Program (OSDCEP).

RATINGS RATIONALE

The Aa2 enhanced rating reflects our assessment of the OSDCEP, which is rated one notch below the State of Ohio's GO rating. The district's estimated fiscal 2021 interceptable aid provides 2.9x coverage of maximum annual debt service on the enhanced debt. Huntington National Bank (A3 stable) will sign a paying agent agreement in accordance with the administrative code requirements. Moody's has received a copy of the approval letter from both the Ohio Department of Education and Ohio Office of Budget and Management, the program administrators.

The coronavirus outbreak is a social risk under our ESG framework, given the substantial implications for public health and safety. The coronavirus crisis is not a key driver for this rating action. We do not see any material immediate credit risks for the programmatic rating of the OSDCEP. Still, the situation surrounding coronavirus is rapidly evolving and the longer-term impact will depend on both the severity and duration of the crisis. Economic impacts of the coronavirus has been felt broadly across the state, leading to significant decreases to the state's revenue collections. Although funding reductions to the state's K-12 sector are likely in upcoming fiscal 2021, the magnitude of the cut is uncertain. If our view of the credit quality of the OSDCEP changes, we will update the rating and/or outlook at that time.

RATING OUTLOOK

The stable outlook assigned to the OSDCEP is based on the State of Ohio's credit outlook.

FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATING

-Upgrade in the State of Ohio's rating

FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATING

-Downgrade in the state of Ohio's rating

-Weakening of program mechanics

LEGAL SECURITY

The Series 2020 bonds are secured by the district's full faith and credit and pledge to levy unlimited ad valorem property taxes. The bonds are further secured by interceptable aid under the OSDCEP.

USE OF PROCEEDS

The Series 2020 GOULT bonds will be issued for the purpose of financing Phase 1 of the district's master plan which entails constructing four new elementary school buildings (grades pre-K-5) to replace the district's five existing elementary schools, along with targeted renovations to the Perry High school (grades 9-12). The Series 2020 bonds were authorized by district voters at a March 17, 2020 election.

PROFILE

Perry Local School District (Stark County) (Aa3) encompasses 24 square miles of Stark County (Aa2) in northeastern Ohio, approximately 20 miles south of the City of Akron (Aa3 stable). The district provides pre-K through 12th grade education to approximately 4,500 students in a community of roughly 30,000 residents.

METHODOLOGY

The principal methodology used in this rating was State Aid Intercept Programs and Financings published in December 2017 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBM_1067422. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.

REGULATORY DISCLOSURES

For 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_1133569.

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.

Andrew Van Dyck Dobos 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 David Strungis Additional Contact Regional PFG Chicago 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

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