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Moody's Assigns Aa1 Enh (SBQLP) to MFA's Local Gov Loan Prog Rev Bonds 2016 Ser.A&B(Muskegon Heights Schools).

New York: Issue: Local Government Loan Program Revenue Bonds Series 2016A (Muskegon Heights Public Schools State Qualified Unlimited Tax General Obligation Local Project Bonds); Enhanced Rating: Aa1; Sale Amount: $16,225,000; Expected Sale Date: 03/09/2016; Rating Description: General Obligation

Issue: Local Government Loan Program Revenue Bonds Series 2016B (Muskegon Heights Public Schools State Qualified Unlimited Tax General Obligation Local Project Bonds - Federally Taxable); Enhanced Rating: Aa1; Sale Amount: $5,235,000; Expected Sale Date: 03/09/2016; Rating Description: General Obligation

Summary Rating Rationale

Moody's Investors Service has assigned an Aa1 enhanced rating to the Michigan Finance Authority's $16.23 million Series 2016A and $5.24 million Series 2016B Local Government Loan Program Revenue Bonds (Muskegon Heights Public Schools State Qualified Unlimited Tax General Obligation Local Project Bonds).

The Aa1 enhanced rating is based on the Michigan School Bond Qualification and Loan Program (SBQLP) rating of Aa1, which reflects sound program mechanics and the strength of the State of Michigan's (Aa1 stable) GO credit. (See State of Michigan's most recent credit report for further detail).

Rating Outlook

The stable rating on the enhanced rating is based on the stable outlook assigned to the programmatic SBQLP rating.

Factors that Could Lead to an Upgrade

Upward movement in the State of Michigan's GO rating

Factors that Could Lead to a Downgrade

Downward movement in the State of Michigan's GO rating

Weakening of the State of Michigan's School Bond Qualification and Loan Program mechanics

Legal Security

Debt service on the 2016 bonds is secured by the district's general obligation unlimited tax (GOULT) pledge. The GOULT pledge for Michigan school districts carries the full faith and credit pledge of the school district, and has a separate dedicated debt service levy, through collection of ad valorem taxes on all taxable property. It is not secured through statute, nor does a lockbox. The bonds are also secured by the State of Michigan's School Bond Qualification and Loan Program (SBQLP), which is the basis for the enhanced rating.

Use of Proceeds

The proceeds of the Bonds will be used to pay certain costs of issuance relating to the Bonds and to refund certain outstanding indebtedness of the School District to the State of Michigan.

Obligor Profile

Muskegon Heights Public Schools, MI encompasses an area of approximately 2 square miles and is located in the city of Muskegon Heights, MI, which is 42 miles northwest of Grand Rapids. The District serves students K-12, with a total enrollment of 1,050 students in fiscal 2016.

Methodology

The principal methodology used in this rating was Rating Transactions Based on the Credit Substitution Approach: Letter of Credit-backed, Insured and Guaranteed Debts published in December 2015. Please see the Ratings Methodologies page on www.moodys.com for a copy of this methodology.

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Publication:Daily the Pak Banker (Lahore, Pakistan)
Geographic Code:1U3MI
Date:Mar 16, 2016
Words:463
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