New York, December 05, 2012 -- Moody's Rating

Issue: Unlimited Tax Refunding Bonds, Series 2012 ; Underlying Rating: Aa2 and Enhanced Rating: Aaa; Sale Amount: $8,120,000; Expected Sale Date: 12-15-2012 ; Rating Description: General Obligation

Opinion

Moody's Investors Service has assigned a Aa2 underlying rating and Aaa enhanced rating to Beaumont Independent School District's (TX) $8,120,000 Unlimited Tax Refunding Bonds, Series 2012. The outlook is stable. At the same time, Moody's has affirmed the Aa2 rating and assigned a stable outlook affecting $397.4 million in outstanding parity debt, net of the refunded bonds. Proceeds from the bonds will be used to refund outstanding debt for an estimated 8% net present value savings.

SUMMARY RATING RATIONALE - UNDERLYING

The bonds are secured by a direct and continuing ad valorem tax levied, without limitation as to rate or amount, against all taxable property within the district. Assignment of the Aa2 rating reflects the district's sizable and growing tax base that is concentration in chemical production along the Gulf Coast. The rating also takes into consideration balanced financial operations with a healthy General Fund balance and an elevated debt burden with potential for future debt needs. The stable outlook reflects our belief that the tax base will continue to experience growth and that financial operations will remain healthy for the long term.

SUMMARY RATING RATIONALE - ENHANCED

The Aaa enhanced rating reflects Moody's assessment of the Texas Permanent School Fund's (PSF) ability to make payments on the guarantee relative to the substantial value of the fund corpus. Additional credit considerations include: the PSF's constitutionally protected corpus, the credit quality of the Texas school district G.O. debt guaranteed by the fund, an investment portfolio that provides satisfactory coverage and liquidity given our estimated probability of calls on the guarantee, and strong legal mechanics that facilitate timely reimbursement to the PSF should guarantee payments occur.

For additional information on the PSF program, please see Moody's Ratings Update Report on the Texas Permanent School Fund dated September 24, 2012.

STRENGTHS

Sizable tax base for the rating

Healthy General Fund reserve

CHALLENGES

Concentration in chemical properties

Leveraged debt position

What Could Make The Rating Go Up

Diversification in the tax base leading to less concentration in the largest taxpayers

Significant improvement in the socioeconomic profile

What Could Make The Rating Go Down

Substantial declines in the tax base

Ongoing trend of General Fund deficits resulting in narrow reserve level

The principal methodology used in this rating was General Obligation Bonds Issued by U.S. Local Governments published in October 2009. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.

REGULATORY DISCLOSURES

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Kristin Button Vice President - Senior 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: 212-553-1653 Adebola Kushimo 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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