New York, December 07, 2012 --

Moody's Rating

Issue: Refunding and Construction Bonds Series B; Enhanced Rating: Aa3; Sale Amount: $1,780,000; Expected Sale Date: 11-27-2012; Rating Description: General Obligation Limited Tax

Opinion

Moody's assigns Aa3 enhanced rating to Gravette School District No. 20's (AR) $1,780,000 Refunding and Construction Bonds, Series B dated January 1, 2013, outlook is stable.

SUMMARY RATING RATIONALE

The rating is based on the State of Arkansas' codified requirement to cure a school district's debt service delinquency with intercepted state funding.

WHAT COULD MAKE THE RATING GO UP

Upgrade of the Arkansas School District Enhancement Program rating

WHAT COULD MAKE THE RATING GO DOWN

Downgrade of the Arkansas School District Enhancement Program rating

Moody's has published a Request for Comment on a proposed methodology for Post-Default Sate Aid Intercept Programs and Financing which builds on the underlying credit of the borrower, a bottom up approach from the current rating approach that notches down from the state rating, a top down approach. We expect that when the methodology is implemented, enhanced ratings on these programs could change. For further details regarding the implications of the proposed methodology changes on Moody's ratings please refer to Moody's Request for Comment titled, Proposed Methodology for Post-Default State Aid Intercept Programs and Financings, U.S. Public Finance.

The issuer's enhanced rating was assigned by evaluating factors believed to be relevant to the credit profile of the Arkansas School District Enhancement Program, as authorized by Arkansas Code Ann. 6-20-1204 of 2003. The program provides for undistributed state aid to be diverted to bond holders in the event of payment default. Although the program is triggered by an actual default, Moody's believes that the intercept provisions increase the likelihood of recovery should a scheduled debt service payment be missed because the authorizing legislation mandates that the state Department of Education cure the delinquency. We also believe the cure period is unlikely to be lengthy, especially given strong state oversight of school district finances.

These attributes were compared against other programs both within and outside of the Arkansas School District Enhancement Program's core peer group, and this intercept program is believed to be comparable to ratings assigned to other programs of similar credit risk.

REGULATORY DISCLOSURES

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