News Column

Fitch Rates Laredo ISD, Texas' ULT Rfdg Bonds 'AAA' PSF; Outlook Stable

July 22, 2014

AUSTIN, Texas--(BUSINESS WIRE)-- Fitch Ratings takes the following rating action on Laredo Independent School District, Texas' unlimited tax (ULT) bonds:

--$34 million ULT refunding bonds, series 2014 assigned 'AAA' PSF.

The 'AAA' rating is based on a guarantee provided by the Texas Permanent School Fund (bond guarantee program rated 'AAA' by Fitch).

The refunding bonds are scheduled to price during the week of July 21. Proceeds of the refunding bonds will be used to refund outstanding debt for interest cost savings.

The Rating Outlook is Stable.

SECURITY

The unlimited tax bonds are secured by an annual property tax levy imposed on all taxable property within the district. The bonds are further secured by the Texas Permanent School Fund.

For more information on the district, see Fitch's report on Laredo Independent School District, TX dated June 4, 2014.

KEY RATING DRIVERS

PRUDENT FINANCIAL MANAGEMENT: Management's implementation of budget cuts and stringent procurement requirements has enabled the district to grow fund balance reserves to solid levels providing financial flexibility.

MATURE TAX BASE: After a long period of healthy growth, taxable valuations have remained sluggish in recent years. Prospects for future growth are limited as the district's tax base is relatively mature and built out.

STATE AID REVENUES DOMINANT: The district is considered property poor, thus it receives a substantial amount of state aid for operations and maintenance. Prudent budget adjustments allowed the district to absorb recent cuts in state aid.

HIGH DEBT; LARGE OFFSETS: The district's overall debt relative to its market value is high, but substantial debt service offsets from the state keep carrying costs modest.

FLAT ENROLLMENT TRENDS: The district has experienced nearly flat enrollment trends due to its maturity. Such trends relieve the district of growth pressures, allowing it to address the extensive renovation or replacement of its aging facilities.

RATING SENSITIVITIES

STRUCTURAL IMBALANCES: SHIFT IN FUNDAMENTALS: The rating is sensitive to shifts in fundamental credit characteristics including the districts healthy financial profile.

Additional information is available at 'www.fitchratings.com'

In addition to the sources of information identified in the Tax-Supported Rating Criteria, this action was additionally informed by information from CreditScope, University Financial Associates, LoanPerformance, Inc., and Texas Municipal Advisory Council.

Applicable Criteria and Related Research:

--'Tax-Supported Rating Criteria', dated Aug. 14, 2012.

--'U.S. Local Government Tax-Supported Rating Criteria', dated Aug. 14, 2012.

Applicable Criteria and Related Research:

Tax-Supported Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=686015

U.S. Local Government Tax-Supported Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=685314

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=840941

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.



Fitch Ratings

Primary Analyst:

Jose Acosta, +1-512-215-3726

Senior Director

Fitch Ratings, Inc.

111 Congress Avenue, Suite 2010

Austin, TX 78701

or

Secondary Analyst:

Shane Sellstrom, +1-512-215-3741

Analyst

or

Committee Chairperson:

Karen Krop, +1-212-908-0661

Senior Director

or

Elizabeth Fogerty, +1-212-908-0526

Media Relations, New York

elizabeth.fogerty@fitchratings.com


Source: Fitch Ratings


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