School District’s Bond Rating Cut

A major Wall Street rating service has taken a notch off the Los Angeles Unified School District’s credit rating on the eve of a $2-billion bond sale to finance school construction.

Fitch Ratings cited the district’s consecutive deficit budgets and increased indebtedness, along with the state’s deteriorating financial condition, as the reasons for downgrading the district to AA-, the fourth-highest rating.

The change brings Fitch in line with Standard & Poors and Moody’s Investors Services and is not expected to interfere with the issuing of the construction bonds, which began Tuesday.

Joe Zeronian, Los Angeles Unified’s chief financial officer, said the lower rating probably would not raise the interest the district must pay on the $3.35-billion bond, approved by the voters in November to build about 120 schools and expand 79 others. He said insurance allows the bond to sell at the equivalent of a triple-A rating.