New York, December 06, 2012 --

Moody's Rating

Issue: General Obligation School Building Bonds, Series 2013; Underlying Rating: Aa3; Enhanced Rating: Aa1; Sale Amount: $5,000,000; Expected Sale Date: 12/18/12; Rating Description: General Obligation

Opinion

Moody's Investors Service has assigned a Aa3 underlying rating to Clovis Municipal School District No. 1's (NM) $5 million General Obligation School Building Bonds, Series 2013. Concurrently, Moody's has affirmed the Aa3 underlying rating on the district's $31.8 million in outstanding parity debt, inclusive of the current sale. Proceeds from the sale will be used to fund the district's on-going school building and renovation program. Additionally, we have assigned a Aa1 enhanced rating to the current sale based on the New Mexico School District Enhancement Program. In conjunction with assignment of a negative outlook on the U.S. government, the outlook for the State of New Mexico has been revised to negative due to indirect links between the state and the federal government. The negative outlook is also applicable to the Aa1 enhanced rating. For further information on the negative outlook on the state, please see the special comment from December 7, 2011 entitled "Most Aaa-Rated State and Local Governments Revert to Stable Outlooks, Despite Negative Pressure on U.S. Government Rating" for more information.

SUMMARY RATING RATIONALE - UNDERLYING

The bonds are general obligations of the district, payable solely out of general (ad valorem) property taxes which are levied against all taxable property in the district without limitation as to rate or amount. The Aa3 underlying rating reflects the district's continued tax base growth and stable economy, satisfactory financial position despite operational challenges due to reductions in state aid, and a manageable debt profile.

STRENGTHS

*Economic stability afforded by the institutional presence of Cannon Air Force Base

*Historically conservative financial management practices

CHALLENGES

*Recent operating pressures due to multiple mid-year cuts in state aid

*Below average socioeconomic profile

SUMMARY RATING RATIONALE -- PROGRAMMATIC ENHANCED

Assignment of the Aa1/Negative Outlook enhanced rating for the proposed transaction is based upon our assessment of the PostMarch 30, 2007New Mexico School District Enhancement (NMSDE) Program and a review of the district's proposed financing.

The NMSDE Post-March 30, 2007 program demonstrates generally average to strong state commitment and program history as defined by the first factor of the intercept methodology published February 2008. The funds available for intercept are the current fiscal year's undistributed state aid (state equalization guarantee distribution, or SEG) to a school district. State oversight of the program is strong as school district budgets must be reviewed and approved by the New Mexico Public Education Department (PED). Upon issuance of its general obligation bonds, a school district must file with the New Mexico Department of Finance and Administration (DFA) a copy of the bond resolution, offering documents, and paying agent agreements as well as contact information. The state's oversight is further reflected in the NMSDE Post-March 30, 2007 authorizing legislation requirement that, if a debt service payment is made on behalf of a school district, the PED will initiate an audit of the school district and assist in implementing measures to ensure that future payments will be made on a timely basis. Per authorizing statute, the state covenants that it will not repeal, revoke or rescind the provisions of the intercept statute or modify or amend it so as to limit or impair the rights and remedies granted by the statute, though modifications to the amount and timing of state aid payments would be permitted. The expectation of continued state support is strong as the intercept program benefits school capital financings, an essential public purpose. Though the program has never been utilized, the state has demonstrated strong commitment to school capital financings and the intercept program's mechanics should result in full and timely payment of debt service, if the program were to be invoked.

The NMSDE Post-March 30, 2007 program demonstrates generally average to strong program mechanics, the second factor of the intercept methodology. Intercept mechanics are established in statute and in an administrative policy document outlining implementation of the program. The mechanics of the intercept program direct the paying agent to notify the DFA if payment of principal or interest on school district general obligation bonds has not been received on the business day immediately prior to the date on which the payment is due. Upon notification by the paying agent and confirmation that the payment has not been made to the paying agent one business day prior to the due date, the DFA must forward from available funds (as described above) the amount due to the paying agent. The state has a history of passing budgets on time. Moody's therefore concludes that late budget passage likely will not be a factor placing at risk the availability of funds under the intercept program. Based on the overall assessment of program mechanics described above, Moody's categorizes program mechanics as generally average to strong. However, the one business day notification requirement regarding a missed debt service payment is considered to be a weak factor.

FINANCING LEVEL ENHANCED RATING RATIONALE

While Moody's has assigned a programmatic rating of Aa1, with a negative outlook to the NMSDE Post-March 30, 2007 program, rating actions on specific credits that benefit from the intercept program depend on the evaluation of each according to the additional rating factors for individual intercept financings, including the sufficiency of interceptable revenues as determined by specific coverage tests, the timing of the state's fiscal year as it relates to scheduled debt service payment dates and transaction structure, which will consider the role of the independent fiduciary and reserve fund.

The financing level rating rationale is based on an additional two factors; revenue sufficiency and transaction structure. Just as with the two factors considered for the programmatic rating, analysts score subfactors as strong, average or weak. Financings that achieve strong or average scores on a majority of subfactors will usually achieve ratings that are equivalent to the program level rating, whereas financings with weaker scores will be rated one or more notches lower than the program level rating.

Based on SEG budgeted for state fiscal year 2013, interceptable revenues from the state for Clovis Municipal School District No. 1 provide a strong minimum of 14.38 times coverage of maximum periodic debt service. Further, state revenues provide a strong minimum 13.19 times maximum annual debt service coverage when coverage is calculated without the benefit of the state's final monthly state aid payment within a fiscal year. This calculation serves as a stress test to evaluate the sufficiency of interceptable aid even if the state were to delay the final state aid payment within a fiscal year. The stability of state aid is rated as weak given recent mid-year cuts in state aid to address fiscal stress at the state level. However, this weakness is somewhat mitigated by a continued level of ample debt service coverage as previously discussed. There is no reason to believe that the district's allocation of state equalization aid would decline based on enrollment projections. The fact that SEG can be accelerated to make debt service payments, if necessary, is considered a strong credit factor. The fact that principal is scheduled to be paid in August, one month into the state's fiscal year is considered to be weak. However, this weakness is offset by the state's favorable budget adoption history.

In terms of the transaction structure, the program requires the appointment of a third-party fiscal agent: BOKF, N.A. for the current sale. The fiscal agent is required to notify the state if an intercept of SEG is required, a characteristic that is considered as average. While there is no debt service reserve fund, such a fund is not typically utilized to support intercept financings supporting school districts.

Since the financing factors for the proposed transaction are generally considered strong or average, Moody's has assigned an enhanced rating to the forthcoming transaction that is equivalent to the programmatic rating of Aa1 with a negative outlook.

WHAT COULD MAKE THE RATING GO UP

*Significant tax base expansion coupled with strengthened socioeconomic indices

*Trend of operating surpluses resulting in bolstered financial reservesWHAT COULD MAKE THE RATING GO DOWN

*Depletion of General Fund balance

*Declining tax base trend and/or weakened socioeconomic profile

PRINCIPAL METHODOLOGIES

The principal methodologies used in this rating were General Obligation Bonds Issued by U.S. Local Governments published in October 2009, and State Aid Intercept Programs and Financings published in February 2008. Please see the Credit Policy page on www.moodys.com for a copy of these methodologies.

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

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Keaton Spencer Hoppe Associate Analyst Public Finance Group Moody'sInvestors Service, Inc.600 North Pearl Street Suite 2165 Dallas, TX 75201 U.S.A. JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653Toby Cook Vice President - Senior Analyst Public Finance Group JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653 Releasing Office: Moody's Investors Service, Inc.250 Greenwich StreetNew York, NY 10007 U.S.A. JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653(C) 2012 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved.

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