Moody's Investors Service last week assigned its first rating to a Minnesota school district bond issue supported by the state's new credit enhancement program.

Moody's assigned an A1 rating to $15.6 million of general obligation bonds that were issued by Thief River Falls Independent School District No. 564 last Monday.

Earlier this month, the rating agency said it would assign a minimum A1 rating to GO bonds eligible for the program. In a press release, Moody's said the A1 rating was dependent on an open appropriation from the state's general fund to avert any anticipated school district defaults, advance notification by the paying agent of a potential default, and the state's continued commitment to overseeing school districts.

In addition, Moody's confirmed the Baa rating on $6.36 million of the school district's outstanding GO debt issued prior to the creation of the state program.

Dan Aschenbach, a vice president at the rating agency, said that the current issue increases the district's debt burden 12.2%, which is four times the national median. In addition, Aschenbach said the school district has a narrow tax base dominated by a weak agricultural sector, above average unemployment, and per capita incomes that are 70% of the state's average.

On Aug. 4, Standard & Poor's Corp. assigned an AA rating to three Minnesota school district bond issues, including Thief River Falls. The state's general obligation debt is rated Aa by Moody's and AA-plus by Standard & Poor's.

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