Fitch Downgrades Natomas USD, California's GOs to 'BBB'; Watch Negative
NEW YORK--(BUSINESS WIRE)--Fitch Ratings downgrades Natomas Unified School District (USD), California's (the district) $64.6 million of outstanding general obligation (GO) bonds to 'BBB' from 'A-' and places the bonds on Rating Watch Negative.
While the original rating was assigned July 29, 2004, the ratings on the 1999 refunding GO bond was not reflected on Fitch's web site. The full rating history is now available at 'http://cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww.fitchratings.com&esheet=6048430&lan=en_US&anchor=www.fitchratings.com&index=1'.
The downgrade reflects the district's deteriorating financial position, as evidenced by a significant structural imbalance and projected year end deficit balances for fiscals 2010-12. With the weakened financial position brought on largely by misestimates of student enrollment and reduced state funding without commensurate spending cuts, Fitch believes the district's ability to achieve balance and rebuild reserves will be hindered in the future by the area's significantly impacted housing market and a local moratorium on new home building. While the district is working with a consultant and the Sacramento County Office of Education to reduce the budgeted fiscal 2010 deficit, Fitch views the level of actions needed to return reserves to levels consistent with the prior 'A-' rating as unlikely in the near-term. Also, the district's debt amortization is very slow, further reducing financial flexibility.
NEW YORK--(BUSINESS WIRE)--Fitch Ratings downgrades Natomas Unified School District (USD), California's (the district) $64.6 million of outstanding general obligation (GO) bonds to 'BBB' from 'A-' and places the bonds on Rating Watch Negative.
While the original rating was assigned July 29, 2004, the ratings on the 1999 refunding GO bond was not reflected on Fitch's web site. The full rating history is now available at 'http://cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww.fitchratings.com&esheet=6048430&lan=en_US&anchor=www.fitchratings.com&index=1'.
The downgrade reflects the district's deteriorating financial position, as evidenced by a significant structural imbalance and projected year end deficit balances for fiscals 2010-12. With the weakened financial position brought on largely by misestimates of student enrollment and reduced state funding without commensurate spending cuts, Fitch believes the district's ability to achieve balance and rebuild reserves will be hindered in the future by the area's significantly impacted housing market and a local moratorium on new home building. While the district is working with a consultant and the Sacramento County Office of Education to reduce the budgeted fiscal 2010 deficit, Fitch views the level of actions needed to return reserves to levels consistent with the prior 'A-' rating as unlikely in the near-term. Also, the district's debt amortization is very slow, further reducing financial flexibility.
