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Moody’s affirms Delta’s Aa2 bond rating

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POSTED July 21, 2012 1:46 a.m.

STOCKTON — Credit rating agency Moody’s has affirmed the Aa2 rating for Delta College’s long-term general obligation bonds of approximately $143.5 million in outstanding debt.

Moody’s Aa2 rating is the agency’s third highest “High Grade” credit ranking, indicating the district has a “Very Strong” capacity to meet its financial commitment. It differs from Moody’s premier Aaa credit ranking by only a small degree.

“Maintaining the district’s strong credit rating means Delta College’s short and long-term borrowing costs will not increase during this next fiscal year,” said Chris Yatooma, Delta’s Vice President of Administrative Services.

Moody’s Investors Service indicates that the district’s strengths include: A very large and agricultural tax base; manageable debt profile; and Delta College’s trend of satisfactory financial operations. Delta’s outstanding rating could improve if the college maintains projected reserve levels of approximately $9.5 million, and Delta’s San Joaquin Valley college district valuation and wealth levels of $56.6 billion increase.

Moody’s expects that Delta College’s low and manageable debt burden of 0.2% of the district’s full valuation will continue to decline. Rationale for this key credit statistic is the college’s absence of future debt plans and an average amortization of 52.8% of debt principal in 10 years.

Yatooma emphasizes that Delta’s Aa2 credit rating will have two immediate benefits over the next year. “First, Delta will need to borrow more cash this year than it did last due to the state’s continuing fiscal troubles. Second, Delta plans to sell its final series of Measure L bonds over the next half year, so maintaining a high credit score will keep bond costs down resulting in lower taxes for District property taxpayers.”

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