15.11.2012 23:06
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Huber Heights City School District, OH -- Moody's downgrades rating to Aa3 from Aa2 on Huber Heights City School District's (OH) general obligation debt; downgrades rating to A1 from Aa3 on...

Aa3 rating applies to $79.6 million of outstanding G.O. debt, A1 rating applies to $1.6 million of outstanding Certificates of Participation

New York, November 15, 2012 -- Moody's Investors Service has downgraded the rating on the Huber Heights general obligation bonds from Aa2 to Aa3, affecting $79.6 million of outstanding general obligation debt. Concurrently, Moody's downgraded the rating on the district's certificates of participation from Aa3 to A1. A negative outlook has also been assigned.

SUMMARY RATING RATIONALE

The downgrade to Aa3 reflects the district's consecutive operating deficits, resulting in significantly narrowed fund balance and cash reserves. The rating also reflect the district's sizeable tax base, average socioeconomic indicators and manageable debt burden.

The A1 rating on the certificates reflects appropriation risk, the essentiality of the financed facilities, satisfactory legal provisions, dedicated revenues stream, as well as the credit characteristics inherent in the Aa3 general obligation rating. The certificates are secured by the district's pledge to annually appropriate base rental payments in an amount equal to debt service.

The negative outlook reflects the district's pressured finances and the uncertainty surrounding the district's ability to regain structural balance by adequately reducing expenditures or successfully raising new revenues.

STRENGTHS - Sizeable tax base - Average socioeconomic indicators

- Stable enrollment CHALLENGES - Recent valuation decline - Voter rejection of operating levy increases

OUTLOOK

The negative outlook reflects the district's pressured finances and the uncertainty of the district's ability to regain structural balance by adequately reducing expenditures or successfully raising new revenues.

WHAT COULD CHANGE THE RATING - UP (REMOVAL OF NEGATIVE OUTLOOK)

- Achieving structural balance in the general fund and

- Ability to replenish fund balance and stabilize liquidity

WHAT COULD CHANGE THE RATING - DOWN

- Failure to achieve structural balance in the operating budget resulting in further decreases in financial position and reserve levels

- Substantial deterioration in full valuation

METHODOLOGY USED

The methodologies used in this rating were General Obligation Bonds Issued by U.S. Local Governments published in October 2009, and The Fundamentals of Credit Analysis for Lease-Backed Municipal Obligations published in December 2011. Please see the Credit Policy page on www.moodys.com for a copy of these methodologies.

REGULATORY DISCLOSURES

The Global Scale Credit Ratings on this press release that are issued by one of Moody's affiliates outside the EU are endorsed by Moody's Investors Service Ltd., One Canada Square, Canary Wharf, London E 14 5FA, UK, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody's office that has issued a particular Credit Rating is available on www.moodys.com.

For ratings issued on a program, series or category/class of debt, this announcement provides relevant 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 relevant regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides relevant 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.

Information sources used to prepare the rating are the following: parties involved in the ratings and public information.

Moody's considers the quality of information available on the rated entity, obligation or credit satisfactory for the purposes of issuing a rating.

Moody's adopts all necessary measures so that the information it uses in assigning a rating is of sufficient quality and from sources Moody's considers to be reliable including, when appropriate, independent third-party sources. However, Moody's is not an auditor and cannot in every instance independently verify or validate information received in the rating process.

Please see the ratings disclosure page on www.moodys.com for general disclosure on potential conflicts of interests.

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The date on which some ratings were first released goes back to a time before Moody's ratings were fully digitized and accurate data may not be available. Consequently, Moody's provides a date that it believes is the most reliable and accurate based on the information that is available to it. Please see the ratings disclosure page on our website www.moodys.com for further information.

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.

David Strungis Associate Analyst Public Finance Group250 Greenwich StreetNew York, NY 10007 U.S.A. Henrietta Chang VP - Senior Credit Officer Public Finance Group JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653 Releasing Office: Moody's Investors Service, Inc.250 Greenwich StreetNew York, NY 10007 U.S.A. JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653(C) 2012 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved.

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