East High School in Denver. Moody’s Rankings upgraded Denver Public Schools’ general obligation rankings ahead of an $806 million bond sale later this month.
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Denver Public Schools will sell greater than $800 million of bonds later this month, buoyed by a rankings boost from Moody’s Rankings, which cited the district’s strong management for the upgrades.
Moody’s on Wednesday lifted the college system’s issuer rating to Aa1 from Aa2 and its unlimited tax general obligation bond rating to Aaa from Aa1 with stable outlooks.
The latter rating reflects “Colorado’s school district GO bond safety features that include the physical separation through a ‘lockbox’ for pledged property tax collections and a security interest created by statute,” the rating agency said in a report.
“The upgrade is essentially reflective of very strong management of the district’s overall credit profile amid changing economic and demographic profile,” the report said. “The district also advantages from significant voter support of mill levy overrides and bond proposals, a specific credit strength.”
In November, voters approved a record $975 million bond request to deal with among the district’s greater than $2.2 billion in capital infrastructure needs — including air-con — without increasing property tax rates.
DPS is tapping that debt authorization for a GO bond issue scheduled to cost Jan. 22, based on Scott Pribble, a district spokesman.
“The financial position for Denver Public Schools is robust, and Moody’s upgrade reflects a nuanced understanding of the district’s credit,” Pribble said in an email.
The $806 million issue includes $700 million of GO bonds in two series, in addition to one other series with $106 million of GO bonds to refund 2014A and 2014B GO bonds for interest cost savings, based on S&P Global Rankings, which rated the bonds AA-plus with a stable outlook on Thursday.
“The stable outlook reflects our expectation that the district will proceed to make mandatory budget adjustments to take care of structural balance and a level reserve position throughout the outlook horizon, supported by a growing tax base and increased revenue-raising capability,” analyst Alyssa Farrell said in an announcement about S&P’s rating affirmation.
In late August, Fitch Rankings lowered the district’s rankings a notch with the underlying rating falling to AA based on rating criteria changes the rating agency released last April.
The district, which had $2.186 billion of outstanding bonds as of June 30, last sold GO bonds in 2022, based on information posted on the Municipal Securities Rulemaking Board’s EMMA disclosure website.