The markets opened lower on Friday, following the releases of weak producer prices and consumer sentiment reports.
It was a choppy week for the markets due to continued rake hike concerns, lower oil prices and the strengthening dollar.
There were few notable earnings releases this week, turning the focus to the Apple Watch event on Monday, the Fed’s stress tests of the big banks on Wednesday, the Jobless Claims and Retail Sales reports on Thursday and the PPI and consumer sentiment reports on Friday.
Below, we look at all of Moody’s municipal bond upgrades and downgrades from the past week.
- San Francisco Community College District: Moody’s has upgraded the ratings on the San Francisco Community College District’s (SFCCD) outstanding general obligation bonds to Aa3 from A2. The upgrade is driven by the district’s successful appeal to retain its accreditation by being placed on “restoration status” by the Accrediting Commission for Junior and Community Colleges (ACCJC). The upgrade also reflects the district’s narrow but stable fiscal profile, improving managerial functions, and continued progress addressing and remedying the accreditation standards of the ACCJC. The rating also incorporates our view of the district’s exceptionally large tax base, low debt burden, and the nature of the legal pledge securing the obligations.
- City of Florence, KY: Moody’s has upgraded City of Florence, KY to Aa1 from Aa2. The Aa1 rating reflects the city’s strong financial position marked by multiple years of sizeable operating surpluses and very strong reserve position. The rating also considers the city’s stable tax base benefitting from its location near the City of Cincinnati, average socioeconomic profile, and below average debt burden with no plans for additional borrowing.
- Greater Cleveland Regional Transit Authority: Moody’s has upgraded Greater Cleveland Regional Transit Authority to Aa1 from Aa2. The one-notch upgrade to Aa1 reflects ample and growing debt service coverage, even under stressed scenarios, limited future debt plans, consecutive years of robust revenue growth since the recession and strong management of operations. The rating also reflects sound legal provisions including a senior gross lien on a 1% sales tax collected in Cuyahoga County (GOLT rating Aa1/stable); a trustee intercept of those revenues; and a 2 times additional bonds test. The GOLT bonds have a parity claim on the sales tax and since their initial issuance in 1980 have been paid solely from that revenue source.
- Town of Williamstown’s: Moody’s has upgraded Town of Williamstown’s (MA) to Aa1 from Aa2. The Aa1 rating reflects the town’s moderate tax base with above average wealth levels, stable financial position with healthy reserves and manageable debt and pension liabilities. The rating also incorporates the presence of Williams College (Aa1 stable) which represents the largest employer and taxpayer.
- City of Brownwood’s: Moody’s has downgraded the City of Brownwood’s (TX) rating to Baa3 and maintains the negative outlook. The downgrade to Baa3 reflects the city’s weakened liquidity and limited financial position, which historically relies on utility system transfers to support general government operations. The rating further considers a growing moderately-sized tax base, a below average socioeconomic profile, and an elevated debt burden.
- Pinal County Union High School District 840: Moody’s has downgraded Pinal County Union High School District 840 (Santa Cruz Valley) to A2 from A1. The A2 rating reflects the district’s weakened tax base following multiple declines over a five year period substantially decreasing assessed values, as well as the high taxpayer concentration. The rating is indicative of a very small, but stable financial position that experienced consecutive declines. The rating also considers the fluctuating enrollment that impact state funding and financial position. The rating further reflects the small debt burden with rapid amortization.
- Town of Riverhead, NY: Moody’s has downgraded the Town of Riverhead, NY to Aa3 from Aa2. The downgrade to Aa3 is based on the deterioration of General Fund reserves due to annual fund balance appropriations. The Aa3 rating also incorporates the town’s sizeable tax base, above average resident wealth levels, additional reserves in the town’s Highway Fund to support pay-go capital projects, and elevated debt and pension burdens.
- Western School District’s: Moody’s has downgraded Pinal County Union High School District 840 (Santa Cruz Valley), AZ’s general obligation rating to A2 from A1. The downgrade reflects the district’s limited and historically contracting tax base, elevated debt profile, and above-average pension liability. The rating also reflects the district’s participation in Michigan’s State Bond Loan Fund program (SBLF) and perennial use of short-term borrowing to meet liquidity needs.
- North Branch Area School District’s: Moody’s has downgraded North Branch Area School District’s (MI) General Obligation (GO) rating to A3 from A2.The A3 underlying rating reflects the district’s narrow financial position that is unlikely to grow significantly in the near term despite improvement in its financial operations. The rating also incorporates the district’s declining enrollment trend, moderately sized tax base, elevated debt burden with slow principal amortization, and above average pension burden.