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EPISD earns favorable credit rating

(EL PASO INDEPENDENT SCHOOL DISTRICT -- Dec. 16, 2019) — Moody's Investors Service has assigned a Aa2 underlying rating to the El Paso Independent School District, TX's $201 million Unlimited Tax School Building Bonds, Series 2020. Moody's maintains a Aa2 rating on the district's outstanding general obligation unlimited tax (GOULT) bonds, the Aa2 rating on the general obligation limited tax (GOLT) notes, as well as a Aa3 rating on the district's outstanding lease revenue bonds. The outlook is stable.

RATING RATIONALE

The Aa2 rating reflects a large tax base supported by a diverse and growing economy, and consistently healthy financial metrics despite persistent declining enrollment. The rating also reflects resident income indices that are lower than the nation consistent with border credits but incorporates the economic stability stemming from large institutions such as Fort Bliss and the University of Texas at El Paso (University of Texas System rated Aaa stable). Also considered is an above-median debt profile tempered by a below-median pension burden. 

RATING OUTLOOK

The stable outlook reflects our expectation that the tax base will continue to benefit from the diverse economy anchored by stabilizing institutions. The outlook also reflects the expectation that the conservative management team will continue to budget prudently to maintain favorable financial performance, despite challenges associated with decreasing enrollment.

FACTORS THAT COULD LEAD TO AN UPGRADE

  • Continued economic development supporting materially higher assessed values
  • Trend of financial performance that significantly exceeds peers 

FACTORS THAT COULD LEAD TO A DOWNGRADE

  • Weakened financial profile
  • Economic contraction that materially decreases assessed values
  • Continued or increased enrollment loss that leads to structurally imbalanced operating results
  • Increasing debt profile absent growth in the tax base 

LEGAL SECURITY

The district's outstanding GOULT debt, including the Series 2020 bonds, are secured by a direct and continuing annual ad valorem tax, levied on all taxable property in the district without legal limitations as to rate or amount.

USE OF PROCEEDS

Proceeds of the Series 2020 bonds will be used to fund capital improvements at numerous school sites throughout the district. 

PROFILE

El Paso ISD encompasses the majority of the City of El Paso, which is the county seat and the 6th largest city in the state. The local economy is largely driven by defense and logistics, with manufacturing, mining, education and health care also contributing to economic growth. Fiscal 2020 enrollment was estimated at 55,683.

METHODOLOGY

The principal methodology used in this rating was U.S.Local Government General Obligation Debt published in September 2019. Please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.

REGULATORY DISCLOSURES

For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.