Moody’s Ratings assigns Aa3 enh to Lewis CSD, KY’s rev bonds

Moody’s Ratings assigns Aa3 enh to Lewis CSD, KY’s rev bonds

Moody’s Assigns A1 Enhanced Rating to Lewis County School District’s $15.3M Bonds

Moody’s Investors Service has assigned an A1 enhanced (ENH) rating to the $15.3 million School Building Revenue Bonds, Series 2021, issued by the Lewis County School District Finance Corporation in Kentucky according to the report. The rating reflects the district’s participation in the Kentucky School District Enhancement Program, which itself holds an A1 rating with a stable outlook. This program, available to all Kentucky school districts, is structured to align with the credit profile of the Commonwealth of Kentucky, which is currently rated Aa3 with a stable outlook as reported.

The bonds are secured by annual rental payments from the district for the leased project, which include facilities at Lewis County Middle and High Schools and a new central office. These payments are subject to annual appropriation and are directed to the paying agent at least 10 days before debt service due dates. If payments default, the Kentucky Department of Education (KY DOE) is legally obligated to intervene, using available funds to cover obligations. KY DOE’s oversight authority—including the power to disapprove budgets or take over fiscal management—further mitigates credit risk according to the report.

Proceeds from the bonds will finance infrastructure improvements and administrative facility construction, addressing aging infrastructure in the district, which serves approximately 1,947 students daily as stated. The district, located in northeastern Kentucky, operates under a lease revenue structure facilitated by a non-profit finance corporation created under Kentucky law according to the report.

Rating Sensitivity: The A1 ENH rating could improve if Kentucky’s long-term issuer rating is upgraded. Conversely, a downgrade of the state’s rating or weakened program oversight could lead to a revision according to the report. The district does not currently hold an underlying rating, as its credit assessment is fully tied to the enhancement program as reported.

This transaction underscores Kentucky’s broader framework for supporting local education infrastructure through state-backed credit enhancement, balancing fiscal accountability with operational flexibility for school districts.

Source: Moody’s Investors Service, January 20, 2021.