Can anyone translate this? I don't know if this is good or bad for TPS.
CHICAGO - (Business Wire) Fitch Ratings assigns an 'AA' rating to the Toledo City School District (the district), Ohio's approximately $96 million of outstanding general obligation (GO) (unlimited tax) school facilities improvement bonds, series 2003B. The rating is based on the full qualification of the series 2003B bonds for participation in the Ohio School District Credit Enhancement Program (the program); unlimited ad valorem taxes on all taxable property within the district are the anticipated payment and security source for the bonds. The Rating Outlook is Negative, reflecting the Negative Outlook assigned to the state of Ohio's GO rating of 'AA+'. The school district credit enhancement program rating is correlated to the state of Ohio's general credit quality due to the strong legal obligation for the state to fulfill its obligations under the program.
The 'AA' program rating reflects Ohio's statutory requirements for the Ohio Department of Education (ODE) to forward state foundation program payments otherwise due the district to the bond registrar if, prior to the bond payment date, the district has not transmitted funds sufficient to cover required debt service payments on the bonds for any reason. Series 2003B bondholders benefit from rigorous financial oversight, monitoring of school districts by ODE, and strong program mechanics that include a thorough review and approval process of school district applications for program participation by ODE and Ohio Office of Budget and Management (OBM).
Eligible school districts must prove that foundation program payments received in the prior three fiscal years exceed 1.25 times (x) the maximum annual debt service (MADS) on the proposed bonds and outstanding obligations covered by the enhancement program. Over the past three fiscal years, the district's state foundation aid payments exceeded MADS by at least 9x. Fitch expects the district may issue approximately $32 million of GO bonds in the next several months, which would leverage state aid receipts further. Nonetheless, debt service coverage of existing and proposed bonds will remain healthy and well above the program's minimum required coverage levels.
For more information on the state enhancement program, see rating action commentary entitled 'Fitch Assigns Negative Outlook to Ohio School District Enhancement Program Bonds, Affirms 'AA' Rating', dated Feb. 29, 2009.
Fitch issued an exposure draft on July 31, 2008 proposing a recalibration of tax-supported
and water/sewer revenue bond ratings which, if adopted, may result in an upward revision of this rating (see Fitch research 'Exposure Draft: Reassessment of the Municipal Ratings Framework'.) At this time, Fitch is deferring its final determination on municipal recalibration. Fitch will continue to monitor market and credit conditions, and plans to revisit the recalibration in the first quarter of 2009.