S&P: Calexico Community Redevelopment Agency, CA 2011 School District TAB Rating Lowered To 'BBB'; On CreditWatch Negative
At the same time, S&P Global Ratings has placed its 'A-' rating on the Successor Agency (SA) to the Calexico Community RDA's Merged Central Business District and Residential Redevelopment Project Area tax allocation refunding bonds and TABs on CreditWatch with negative implications.
The downgrade and CreditWatch placement on the school district bonds reflect that on Aug. 1, 2016, the issuer made an unscheduled draw on its series 2011 debt service reserve fund in the amount of $59,527.96 in order to make the scheduled Aug. 1, 2016 payment for the 2011 bond issue. According to the Notice of Significant Event dated August 29, 2016, the balance remaining in the reserve account after such draw was $177,554.40.
"The event filing provided no additional information as to the reason for the draw, and we have not received a response from the city as SA regarding the reason for the draw or its plans to replenish the debt service reserve fund," said S&P Global Ratings credit analyst Michael Stock. Therefore, we are unable to determine the magnitude of the rating impact of the reserve draft at this time.
The CreditWatch negative placement reflects that there is at least a one-in-two likelihood of a negative rating action within 90 days. A multiple-notch downgrade is possible should there be a lack of plans for replenishment of the reserve account and/or ongoing disagreements with the DOF regarding distribution of RPTTF money.