KBRA Assigns AAA Rating to Various San Diego Unified School District General Obligation Bonds; Affirms Rating for Parity Bonds
21 Feb 2025 | New York
KBRA assigns a long-term rating of AAA to the San Diego Unified School District (San Diego County, California): 2025 General Obligation Refunding Bonds (Dedicated Unlimited Ad Valorem Property Tax Bonds) (Election of 1998, Series R-8A); 2025 General Obligation Refunding Bonds (Dedicated Unlimited Ad Valorem Property Tax Bonds) (Election of 1998, Series R-8B); 2025 General Obligation Refunding Bonds (Dedicated Unlimited Ad Valorem Property Tax Bonds) (Election of 2008, Series SR-5A); 2025 General Obligation Refunding Bonds (Dedicated Unlimited Ad Valorem Property Tax Bonds) (Election of 2008, Series SR-5B); 2025 General Obligation Refunding Bonds (Dedicated Unlimited Ad Valorem Property Tax Bonds) (Election of 2012, Series ZR-6A); 2025 General Obligation Refunding Bonds (Dedicated Unlimited Ad Valorem Property Tax Bonds) (Election of 2012, Series ZR-6B). KBRA additionally affirms the long-term rating of AAA for the District's outstanding General Obligation Bonds. The rating Outlook is Stable.
Key Credit Considerations
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.
Rating Sensitivities
For Upgrade
- Not applicable at AAA rating level.
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 ratings and relevant documents, click here.