Moody's Assigns Aa2 Underlying Ratings to Oregon Education Districts' Pool Financings

Strategic Insights -

Moody's Investors Service has taken a rating action on two pension obligation bonds (POBs) issued by the Oregon Education Districts, assigning Aa2 underlying ratings to the Full Faith and Credit Pension Obligations, Series 2018 (Federally Taxable) and Full Faith and Credit Pension Obligations, Series 2021A (Federally Taxable) pool financings. This action corrects an error in the previous rating categorization, which was based on the US State Aid Intercept Programs and Financings methodology. The Aa2 underlying ratings reflect the consideration of the lowest rated participant and the weighted average rating of the pool participants, with each borrower's debt service payments enhanced by participation in the Oregon Pension Obligation State Intercept Act.

Key Takeaways:

  • Moody's has assigned Aa2 underlying ratings to the Oregon Education Districts' two outstanding pool financings: Full Faith and Credit Pension Obligations, Series 2018 (Federally Taxable) and Full Faith and Credit Pension Obligations, Series 2021A (Federally Taxable).
  • The rating action corrects an error in the previous categorization of the transactions under the US State Aid Intercept Programs and Financings methodology.
  • The Aa2 underlying ratings reflect the consideration of the lowest rated participant and the weighted average rating of the pool participants, with each borrower's debt service payments enhanced by participation in the Oregon Pension Obligation State Intercept Act.
  • The participating school districts were analyzed to have sufficient annual state aid to debt service coverage ratios with paying agents in place, receiving at least the Oregon Pension Obligation State Intercept Act's rating of Aa2.
  • The pool participants benefit from the Oregon Pension Obligation State Intercept Act, which carries a stable outlook.
  • The ratings are based on an evaluation of the credit quality of each pool participant, using the stronger of the participant's underlying full faith and credit quality or the enhanced rating.
  • The principal methodology used in these ratings was Public Sector Pool Programs and Financings, published in August 2024 and available at https://ratings.moodys.com/rmc-documents/426425.

Statistics:

  • The Aa2 underlying ratings assigned to the Oregon Education Districts' pool financings.
  • The consideration of the lowest rated participant and the weighted average rating of the pool participants as key factors in determining the Aa2 underlying ratings.
  • The stable outlook on the Oregon Pension Obligation State Intercept Act.

Sources:

  • Moody's Ratings, [assignment announcement of Aa2 underlying ratings to Oregon Education Districts' pool financings].
  • Moody's Investors Service, Public Sector Pool Programs and Financings methodology, August 2024, available at https://ratings.moodys.com/rmc-documents/426425.