Moody's Investors Service last week assigned an A1 rating to a $28.7 million Mello-Roos community facilities district bond issue, the highest rating ever given by the rating agency for such debt.

The special tax bond issue will be sold today by the Mount Diablo Unified School District, located about 30 miles northeast of San Francisco. Moody's also rates the district's outstanding general obligation debt A1.

Moody's said development within the district generates tax revenues that provide 1.35 times debt service coverage. Key rating factors included high level values, diversification of ownership, and the large size of the 150-square-mile district. Added security is provided by a strong debt service reserve fund. Moody's noted.

Last year, questions over the safety of Mello-Roos bonds arose after the state's prolonged real estate slump. A bill to address credit quality concerns is now pending before the governor. More than $3.6 billion of Mello-Roos bonds have financed infrastructure needs in California.

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