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Pueblo County School District 60, CO -- Moody's confirms Pueblo Co. School District, CO's GO rating at A1 and assigns A2 issuer rating

·13 min read

Rating Action: Moody's confirms Pueblo Co. School District, CO's GO rating at A1 and assigns A2 issuer ratingGlobal Credit Research - 22 Feb 2021New York, February 22, 2021 -- Moody's Investors Service has assigned an A2 issuer rating to Pueblo County School District 60, Colorado. The issuer rating reflects the district's ability to repay debt and debt-like obligations without consideration of any pledge, security or structural features. Concurrently, Moody's has confirmed the underlying rating on the district's $229.7 million of general obligation unlimited tax (GOULT) debt at A1. This action concludes a review for possible downgrade initiated on January 26, 2021 in conjunction with the release of the US K-12 Public Schools Districts Methodology.RATINGS RATIONALEThe A2 issuer rating incorporates the district's persistently declining student enrollment, resulting from slow job growth in the region. Additionally, the rating considers long-term liabilities and fixed costs, which are expected to remain high due to the district's exposure to an underfunded statewide pension plan and significant capital needs due to aging district infrastructure. Finally, the A2 incorporates the district's above-average taxpayer concentration and satisfactory reserve levels, supported by a recent trend of operating surpluses.The confirmation of the district's GOULT rating at A1, one notch above the issuer rating, reflects Colorado's (Aa1 stable) 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 OUTLOOKMoody's generally does not assign outlooks to local government credits with this amount of debt outstanding.FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATINGS-Reduction in long-term liabilities and fixed costs-Trend of sustained operating surpluses that lead to significant reserve growth-Reversal of declining student enrollment trendFACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATINGS-Substantial increase in long-term liabilities, fixed costs or erosion of capital assets-Material decline in fund balance or cashLEGAL SECURITYThe outstanding GOULT bonds are payable from an ad valorem tax levy on all taxable property sufficient to pay the principal of and interest on the bonds without limitation as to rate or amount. General obligation debt in Colorado is secured by state statute and property taxes dedicated to GO bonds are directly remitted by Pueblo County to the trustee. The district's GOULT bonds are further secured by the state's commitment to cover debt service shortfalls pursuant to the Colorado School District Enhancement Program codified in Colorado statutes Title 22, Article 41, section 110 (22-41-110).PROFILEThe district is located in Pueblo County (Aa2), approximately 110 miles south of Denver (Aaa stable) and includes most of the city of Pueblo. While the local economy has historically relied heavily on the manufacturing sector, Pueblo has recently become more of a bedroom community. The district provides K-12 education services to an estimated 13,000 students as of the 2020-2021 school year, excluding nearly 1,700 students enrolled in charter schools.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.The ratings have been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.These ratings are solicited. Please refer to Moody's Policy for Designating and Assigning Unsolicited Credit Ratings available on its website 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.The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the EU and is endorsed by Moody's Deutschland GmbH, An der Welle 5, Frankfurt am Main 60322, Germany, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody's office that issued the credit rating is available on www.moodys.com.The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the UK and is endorsed by Moody's Investors Service Limited, One Canada Square, Canary Wharf, London E14 5FA under the law applicable to credit rating agencies in the UK. Further information on the UK endorsement status and on the Moody's office that issued the credit rating is available on www.moodys.com.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. Brett Adelglass Lead Analyst Regional PFG Dallas Moody's Investors Service, Inc. 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