KBRA Assigns AAA/K1+ Ratings to Various San Diego Unified School District G.O. Bonds; Affirms Ratings for Parity Debt; Outlook is Stable

7 Sep 2023 | New York

KBRA assigns a short-term rating of K1+ to the following San Diego Unified School District (San Diego County, California) bonds:

2023 General Obligation Bonds (Dedicated Unlimited Ad Valorem Property Tax Bonds) (Election of 2018, Series G-1) (Green Bonds) (Federally Taxable)
2023 General Obligation Bonds (Dedicated Unlimited Ad Valorem Property Tax Bonds) (Election of 2022, Series A-1) (Sustainability Bonds) (Federally Taxable)
2023 General Obligation Bonds (Dedicated Unlimited Ad Valorem Property Tax Bonds) (Election of 2008, Series N-1) (Green Bonds) (Federally Taxable)

KBRA additionally assigns a long-term rating of AAA with a Stable Outlook to the following District bonds:

2023 General Obligation Bonds (Dedicated Unlimited Ad Valorem Property Tax Bonds) (Election of 2018, Series G-2) (Green Bonds)
2023 General Obligation Bonds (Dedicated Unlimited Ad Valorem Property Tax Bonds) (Election of 2018, Series G-3) (Green Bonds)
2023 General Obligation Bonds (Dedicated Unlimited Ad Valorem Property Tax Bonds) (Election of 2022, Series A-2) (Sustainability Bonds)
2023 General Obligation Bonds (Dedicated Unlimited Ad Valorem Property Tax Bonds) (Election of 2022, Series A-3) (Sustainability Bonds)
2023 General Obligation Bonds (Dedicated Unlimited Ad Valorem Property Tax Bonds) (Election of 2008, Series N-2) (Green Bonds)
2023 General Obligation Refunding Bonds (Dedicated Unlimited Ad Valorem Property Tax Bonds) (Election of 1998, Series R-6)
2023 General Obligation Refunding Bonds (Dedicated Unlimited Ad Valorem Property Tax Bonds) (Election of 2008, Series SR-3A)
2023 General Obligation Refunding Bonds (Dedicated Unlimited Ad Valorem Property Tax Bonds) (Election of 2008, Series SR-3B)

Lastly, KBRA affirms the long-term rating of AAA with a Stable Outlook for outstanding District general obligation bonds.

The rating actions reflect the following key credit considerations:

Credit Positives

Per consultation with KBRA external counsel, robust bondholder protections are afforded by California’s constitution and state law.
Substantial and diverse tax base that continues to grow, with levy dedicated to debt repayment.
Experienced management team, with demonstrated ability to manage challenges; augmented by significant state and county oversight and monitoring of District budgeting and fiscal reporting.

Credit Challenges

Declining enrollment trend negatively impacts operating revenues.
Limited operating revenue flexibility requires strong expenditure control to maintain financial health.

For Upgrade

For Downgrade

Significant tax base declines which would necessitate a substantial increase in the tax rate for debt service.
A reduction in reserve levels below 2% of annual operating expenditures would erode financial flexibility and weaken credit strength.

To access rating and relevant documents, click here.