Friday, April 17, 2009

Michigan school bond rating drops to negative

The Michigan School Bond and Loan Qualification Program has just been downgraded to a Aa3/negative rating outlook by Moody's.The state currently has $13.2 billion in debt obligations to Michigan schools.Currently,all debt issued by the State of Michigan has a negative rating by Moody's.

What does this mean?The vast majority of state school districts rely heavily on state aid under the Proposal A provisions.The state must re-allocate funds from other areas as they are Constitutionaly obligated to provide the school districts debt payment assistance thru the School Loan Revolving Fund (SLRF).This can directly affect the bond ratings for school districts and other municipalities and create credit issues potentially.More to come...

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