Corona-Norco Unified School District Community Facilities District No. 98-1, CA's Series 2013 Bonds Rated 'BBB+'

Stocks and Financial Services Press Releases Wednesday May 15, 2013 08:44
NEW YORK--15 May--Standard & Poor's

NEW YORK (Standard & Poor's) May 14, 2013--Standard & Poor's Ratings Services has assigned its 'BBB+' rating, with a stable outlook, to Corona-Norco Unified School District Community Facilities District No 98-1 (CFD), Calif.'s series 2013 special tax refunding bonds.

Credit weaknesses include our view of the district's:
  • Overall value to lien ratio (including overlapping debt) of about 14.5 to 1,
  • Assessed valuation (AV) declines of about 11.5% since 2008/2009, and
  • Moderately high effective tax rates.
The rating also reflects our assessment of the district's credit strengths:
  • Covenant under the indenture to issue additional debt only for refunding purposes.
"The district has no significant taxpayer concentration or exposure to low value-to-lien properties, which we consider a credit strength," said Standard & Poor's credit analyst Michael Stock.

The bonds are secured by a pledge on all special taxes collected from mature, developed, occupied property within the district. Currently the district is levying about 73% of the maximum special tax. Debt service coverage is based, however, on the maximum special tax levy on all taxable property within the CFD for fiscal 2013, which is projected to be 1.1x, net administrative expenses based on Mello-Roos law limitation. The bonds are protected by a cash funded debt service reserve fund.

The outlook reflects the district's continued stability over the next two years, which is reflected in its encompassingall developed, residential, and occupied homes and having a very diverse base. We expect that the properties' moderate overall direct value to lien ratios will contribute to continued low delinquencies and good debt service coverage. High delinquencies could possibly lead to stress on the rating. We don't expect to change the rating over our two-year outlook horizon.


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