Moody's upgrades Denver Public Schools ahead of bond sale

Denver Public Schools will sell more than $800 million of bonds later this month, buoyed by a ratings boost from Moody's Ratings, which cited the district's strong management for the upgrades.

Moody's on Wednesday lifted the school system's issuer rating to Aa1 from Aa2 and its unlimited tax general obligation bond rating to Aaa from Aa1 with stable outlooks.

The latter rating reflects "Colorado's school district GO bond security features that include the physical separation through a 'lockbox' for pledged property tax collections and a security interest created by statute," the rating agency said in a report.

"The upgrade is largely reflective of very strong management of the district's overall credit profile amid changing economic and demographic profile," the report said. "The district also benefits from significant voter support of mill levy overrides and bond proposals, a particular credit strength."

In November, voters approved a record $975 million bond request to address some of the district's more than $2.2 billion in capital infrastructure needs ? including air conditioning ? without increasing property tax rates.

DPS is tapping that debt authorization for a GO bond issue scheduled to price Jan. 22, according to Scott Pribble, a district spokesman.

"The financial position for Denver Public Schools is strong, and Moody's upgrade reflects a nuanced understanding of the district's credit," Pribble said in an email.

The $806 million issue includes $700 million of GO bonds in two series, as well as another series with $106 million of GO bonds to refund 2014A and 2014B GO bonds for interest cost savings, according to S&P Global Ratings, which rated the bonds AA-plus with a stable outlook on Thursday.

"The stable outlook reflects our expectation that the district will continue to make necessary budget adjustments to maintain structural balance and a level reserve position throughout the outlook horizon, supported by a growing tax base and increased revenue-raising capacity," analyst Alyssa Farrell said in a statement about S&P's rating affirmation.

In late August, Fitch Ratings lowered the district's ratings a notch with the underlying rating falling to AA based on rating criteria changes the rating agency released last April.

The district, which had $2.186 billion of outstanding bonds as of June 30, last sold GO bonds in 2022, according to information posted on the Municipal Securities Rulemaking Board's EMMA disclosure website.