SMMUSD Bond Ratings Drop – Still High But Drop – Possibly Increasing Borrowing Costs
Written by 991KBU on July 10, 2020
The Santa Monica Malibu Unified School District has had some of its bond ratings lowered by the Moody’s Investor Service ratings agency.
And that may be the first signs of increased expense for the school district … as it sells bonds to pay for construction projects in Malibu and Santa Monica.
In a report issued yesterday … Moody’s Ratings Service changed its outlook for the district for all series of debt from stable to negative.
And this will mean the school district will have to pay more to borrow money … as authorized by voters … on 68 million dollars worth of new bonds.
A 13 percent portion of the bond debt is sold in the form of certificates or participation .., and Moody’s says that type of borrowing is not quite as trustworthy as regular binds.
The school district right now has 898 million dollars worth of bonds and other long term debt.
Moody’s has dropped its bond ratings for abut 13 percent of those bonds … from outstanding to not outstanding.
The investors service says the school district has an enormous and growing tax base along coastal Los Angeles County … and an affluent wealth and income profile got local residents.
And the fact that the district mostly relies on local property tax revenue … rather than aid from the state government … means the SMMUSD has credit strengths relative to most other California school districts.
The Moody’s downgrade notes that the coronavirus outbreak is a social risk … but not a key driver for this rating action.
The situation surrounding coronavirus .. though … is rapidly evolving and the longer term impact will depend on both the severity and duration of the crisis.
The Moody’s downgrade was announced late yesterday.
We’ve asked the school district what it has to say … we’ll let you know.