CUSIP 2417218B8

  • ISIN: US2417218B80
  • Entity Name: DeSoto Independent School District
  • Sector: Municipal Agency
  • Announcement Date: *****
  • Effective Date: *****
  • Issue Date: *****
  • Maturity Date: *****
  • Country of Issuer: *****
  • Region: N.Amer
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  • CA Type: Rating Downgrade
  • News: S&P Global Ratings lowered its underlying rating to `A` from `A+` on DeSoto Independent School District (ISD), Texas` general obligation (GO) and limited-tax debt. At the same time, S&P Global Ratings has placed its `A` underlying rating on CreditWatch with negative implications. The downgrade reflects our view of the district`s weakened liquidity position that has necessitated the issuance of tax and revenue anticipation notes (TRANs) in November 2018 to pay for operational expenses, including salaries. These cash-flow pressures have largely resulted from prior tax rate mismanagement that led to a cash shortfall in the general fund. To ensure timely debt service payments, the district transferred cash to the debt service fund from the general fund in August 2017 and 2018. This resulted in the general fund`s weakened cash position. We understand the district will need to borrow additional funds in April of this year to fund operational costs for the same reason. Additionally, the district will likely need to restructure its current debt obligations to provide near-term relief, particularly regarding its Aug. 15, 2019 debt service payment. The CreditWatch placement reflects our view that there is at least a one-in-two chance that we could lower the rating within the next 90 days. Within the next 90 days, we anticipate learning more regarding the district`s plans to address the current financial situation. We could lower the rating further if the district is unable to address its liquidity pressures and continues to rely on cash-flow borrowing to fund operations. Additionally, if fund balance is projected to materially decline and remain at levels weaker than what we view as strong as a result of the cash-flow pressures, to a level that we believe is no longer commensurate with the current rating, we could lower the rating. DeSoto ISD is a suburban school district roughly 15 miles south of downtown Dallas. The district benefits from its location near Dallas, with increasing enrollment and a growing tax base. It relies on state funding as its largest revenue source given its property wealth, however. Financially, the district has maintained reserves that we view as strong or very strong in recent years, but we believe that recent fiscal mismanagement may lead to a decline in reserves during the next two fiscal years. The district`s debt burden remains high to moderately high. For Bond Document please visit
  • Description: *****
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