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EXTRA CREDIT: Moody's Upgrades P-CCS' Credit Rating to Aa2 from Aa3

Post Date:04/09/2019 4:20 PM
  • School NameCommunications Office

NEW YORK -- Moody's Investors Service has upgraded to Aa2 from Aa3 the rating on Plymouth-Canton Community Schools, MI's general obligation unlimited tax (GOULT) debt, on Monday, April 8. Concurrently, Moody's has assigned an Aa2 to the district's $6.3 million 2019 School Building and Site Bonds, Series C (General Obligation - Unlimited Tax). Post-issuance the district will have $200.7 million in GOULT debt outstanding, of which $196.5 million is rated by Moody's.

Increasing the credit rating of the school district will reduce future interest payments, resulting in a direct benefit to taxpayers. 

RATINGS RATIONALE
The district's Aa2 general obligation rating is supported by its sizable tax base in southeast Michigan (Aa1 stable) with above average resident income indicies, along with its recently strengthened fund balance and liquidity. This is balanced against the district's flat enrollment trends, moderate debt, and elevated exposure to unfunded pension liabilities associated with its participation in a statewide cost-sharing plan.

RATING OUTLOOK
Outlooks are typically not assigned to underlying local government credits with this amount of debt outstanding.

FACTORS THAT COULD LEAD TO AN UPGRADE
- Positive enrollment trends leading to increased revenue and improved operating reserves
- Moderation of debt and/or pension burdens

FACTORS THAT COULD LEAD TO A DOWNGRADE
- Negative enrollment trends that result in decreased revenue and diminished budgetary reliability
- Sustained narrowing of fund balance and liquidity
- Material increases to debt and/or pension burdens
- Marked declines in the tax base and resident income levels

LEGAL SECURITY
Debt service on the 2019 School Building and Site Bonds, Series C is secured by the district's general obligation unlimited tax pledge. The security carries the full faith and credit pledge of the school district, and has a separate dedicated debt service levy, through collection of ad valorem taxes on all taxable property.

USE OF PROCEEDS
Proceeds of the 2019 School Building and Site Bonds, Series C will be used to finance various improvement projects throughout the district, including new roofs, parking lot repairs, and bus purchases. This is the third and final issuance for debt authorized by voters in May 2013.

PROFILE
Plymouth-Canton Community Schools encompasses approximately 54 square miles in parts of Wayne (Baa2 stable) and Washtenaw (Aaa) counties in southeastern Michigan. The district includes all of the City of Plymouth and Plymouth Township, as well as almost 90% of Canton Township and small parts of surrounding communities. The district operates 23 school buildings, offering pre-K through 12th grade education for 17,531 students in a community of approximately 121,300 residents.

METHODOLOGY
The principal methodology used in these ratings was US Local Government General Obligation Debt published in December 2016. Please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.

REGULATORY DISCLOSURES
For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt 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. 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.