KBRA Assigns AAA Rating to State of Ohio General Obligation Highway Capital Improvements Bonds, Series Z, and General Obligation Highway Capital Improvements Refunding Bonds, Series AA; Affirms Rating for Parity Bonds
8 Jan 2026 | New York
KBRA assigns a long-term rating of AAA to the State of Ohio General Obligation Highway Capital Improvements Bonds, Series Z, and General Obligation Highway Capital Improvements Refunding Bonds, Series AA. Concurrently KBRA affirms the AAA rating for the State's outstanding General Obligation Highway Capital Improvements Bonds. The Outlook is Stable.
Highway Capital Improvements Bonds (HCIBs) are general obligations of the State payable and secured by a pledge of the full faith and credit, revenue and taxing power (excluding net State lottery proceeds) of the State, and fees, excises and license taxes levied by the State relating to registration, operation or use of vehicles on public highways, or to fuels used for propelling such vehicles. The Ohio constitution provides that highway user fees, and HCIBs backed by such user fees, be used solely for highway and road purposes. Furthermore, the constitution limits the amount of HCIBs outstanding to no more than $1.2 billion at any given time (approximately $606.4 million outstanding as of December 2025).
Proceeds of the Series Z Bonds will be used to finance highway capital improvements and the cost of issuance. Proceeds of the Series AA Bonds will refinance certain outstanding Bonds and pay costs of issuance.
Key Credit Considerations
The rating affirmation reflects the following key credit considerations:
Credit Positives
- Double-barreled nature of the security, consisting of a pledge of both constitutionally dedicated highway taxes and the State’s general obligation, effectively placing HCIBs in a priority position relative to G.O. bondholders.
- Exceptionally strong coverage (27.3x, FY 2025) of HCIB debt service from constitutionally dedicated pledged revenues.
- Minimal risk of overleveraging pledged revenue source given HCIB debt cap (maximum $1.2 billion).
- Socioeconomic indicators including population, employment and gross state product growth lag the U.S.
Credit Challenges
Rating Sensitivities
For Upgrade:
- Not applicable at AAA rating level.
For Downgrade:
- Significant deterioration in pledged revenues or the State’s general credit fundamentals.
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