Ottawa Hills Local Schools and its upcoming debt sale both received initial Aa1 ratings from credit agency Moody’s Investors Service. The ratings are the second-highest possible from Moody’s.
Moody’s reviewed the district’s finances as it prepares to sell $8.5 million in bonds for several construction projects at the Junior/Senior High School. Voters approved the sale of those bonds during the election on Nov. 3, 2020.
The high rating allows Ottawa Hills to lower its borrowing costs. Currently, the district has no debt and therefore no pre-existing credit rating.
“We are extremely happy with the Moody’s rating as it validates not only our internal controls and processes, but the ongoing financial trust and support from our community,” said Brad Browne, the district’s treasurer and chief financial officer. “This is great news for our bond project and the students and teachers at the Junior/Senior High School.”
Design and other planning related to those projects is already under way; construction is expected to start once students and teachers leave for the summer at the end of May.
According to Moody’s, the Aa1 issuer rating reflects the district’s standalone credit quality and ability to repay debt and debt-like obligations. The rating incorporates very strong resident incomes, strong financial reserves, and growing enrollment trends with good prospects for sustained demand given the district’s consistently strong academic performance.
?The rating also reflects an institutional and governance framework that allows for the district to collect a large portion of its operating revenue from local sources. The rating further incorporates the district’s above-average leverage related to long-term debt, pension and Other Postemployment Benefits Liabilities. Moody’s stated that the coronavirus pandemic has not had a material impact on the district’s financial profile or enrollment trend and the district’s strong reserves will be an important mitigating factor going forward.
Last February, Mr. Browne received auditing awardThe district received a special state award tonight for how well we kept financial records and accounted for public money for the fiscal year ended 2019. "The Auditor of State Award" is given to less than 8 percent of the approximate 5,900 entities across Ohio that spend taxpayer money.
About Moody's Global Long-Term Rating Scale
- Aaa: Obligations rated Aaa are judged to be of the highest quality, subject to the lowest level of credit risk.
- Aa: Obligations rated Aa are judged to be of high quality and are subject to very low credit risk.
- A: Obligations rated A are judged to be upper-medium grade and are subject to low credit risk.
- Baa: Obligations rated Baa are judged to be medium-grade and subject to moderate credit risk and as such may possess certain speculative characteristics.
- Ba: Obligations rated Ba are judged to be speculative and are subject to substantial credit risk.
- B: Obligations rated B are considered speculative and are subject to high credit risk.
- Caa: Obligations rated Caa are judged to be speculative of poor standing and are subject to very high credit risk.
- Ca: Obligations rated Ca are highly speculative and are likely in, or very near, default, with some prospect of recovery of principal and interest.
- C: Obligations rated C are the lowest rated and are typically in default, with little prospect for recovery of principal or interest.
Note: Moody’s appends numerical modifiers 1, 2, and 3 to each generic rating classification from Aa through Caa. The modifier 1 indicates that the obligation ranks in the higher end of its generic rating category; the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates a ranking in the lower end of that generic rating category. Additionally, a “(hyb)” indicator is appended to all ratings of hybrid securities issued by banks, insurers, finance companies, and securities firms.*
Learn more about the ratings