Switch to PNC from Wells Fargo will downgrade Phila school debt: Moody's

This file photo shows the signage for credit rating agency Moody's in New York. (Associated Press)

Moody's Investors Service plans to cut its long-term rating on $75 million of Philadelphia School District bank-backed revenue bonds (Series G, 2010) to A2, from Aa3, as the district changes the bank backing the debt with a line of credit, to PNC Bank, from Wells Fargo Bank, Moody's analyst Josephine Castro told investors in a report today.

The school district had asked Moody's to review the rating after it disclosed the bank switch, effective Oct. 31. The lower rate reflects Moody's view of PNC as debt guarantor, compared to Wells Fargo. Typically borrowers with low-rated bonds have to pay investors more to buy their paper than borrowers with higher ratings.