Press Release|Public Finance
KBRA Affirms BBB+ Rating for the Board of Education of the City of Chicago Capital Improvement Tax Bonds
14 Mar 2025 | New York
KBRA affirms the long-term rating of BBB+ for the Board of Education of the City of Chicago Capital Improvement Tax Bonds. The rating Outlook is Stable.
Key Credit Considerations
The rating was affirmed because of the following key credit considerations:
Credit Positives
- Under the CIT Act, a dedicated property tax levy is authorized for payment of CIT bonds.
- Under the Indenture, the Board covenants to extend the CIT levy in an amount sufficient to provide at least 1.10x annual debt service in every year.
- The Consolidated Debt Service Reserve Fund, which provides a debt service coverage cushion and is replenished through the flow of funds.
Credit Challenges
- Debt service payments are reliant on timely tax collections which show softening recently to a multiyear low.
- The potentially unknown position of CIT Bonds within the CPS complex could challenge the security, particularly in times of severe distress.
Rating Sensitivities
For Upgrade
- Improved credit profile of the Chicago Public Schools
For Downgrade
- Further declines in collection rates of the Capital Improvement Bond Tax Levy
- Draws on Consolidated Debt Service Reserve Fund without replenishment
- Further deterioration in the credit profile of the CPS which is currently experiencing a multitude of pressures
To access ratings and relevant documents, click here.