MOODY'S ASSIGNS A2 RATING TO LAUSD'S 2009 REFUNDING COPS

Posted on: December 23, 2009, 9:13 pm

NEW YORK, Dec 23, 2009 -- Moody's Investors Service has assigned an A2 rating to the Los Angeles Unified School Refunding Certificates of Participation 2009 Series A (Multiple Properties Project) issued through the LAUSD Financing Corporation. At this time, we have also affirmed the underlying, long-term ratings on both the district's outstanding general obligation bonds and its various general fund-related financings as discussed below. The outlook for these ratings is stable, notwithstanding the region's current economic weakness and financial pressures stemming largely from the state's own financial difficulties. These pressures have thus far been no greater than those experienced by other urban districts in the state, and the district has displayed considerable willingness and ability to make deep, difficult budgetary adjustments to preserve financial flexibility consistent with the current ratings. There may also be pressures from the state budget which affect the district disproportionately as the district is the recipient of a significant amount of assistance not available to most districts in the state. Our ratings and outlook reflect our expectation that the district will continue to make appropriate cuts in its budget to maintain operating reserves consistent with the rating level and its board adopted policies. Should our expectations prove incorrect, the district's ratings would come under negative pressure. The district serves much of the city of Los Angeles and adjacent communities. The size and diversity of the economic base serve as key credit strengths. Despite the diversity of the employment base, the local unemployment rate has climbed above the statewide rate which is significantly higher than the national rate. Continued economic weakness will likely undermine tax base growth in the near term. While the current year's tax base remains unchanged from 2009, the district expects that the weak economy will result in reduced Assessed Valuation (AV) in the near term which will limit the district's capacity to borrow and could lead to debt ratios which are higher than those of other districts in the state and large districts nationally...

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