KBRA Assigns AAA, Stable Outlook to State of Wisconsin G.O. Refunding Bonds
7 Feb 2025 | New York
KBRA assigns a AAA rating, with a Stable Outlook to the State of Wisconsin's (the State's) General Obligation (G.O.) Refunding Bonds of 2025, Series 3 and G.O. Refunding Bonds of 2026, Series 1 (Forward Delivery). Proceeds of 2025, Series 3 will be used by the State to purchase certain outstanding G.O. bond maturities tendered by invited bondholders under a January 24th Invitation to Offer to Tender Bonds. Proceeds of 2026, Series 1 (Forward Delivery) will current refund certain outstanding G.O. bond maturities with a May 1, 2026 call date. A portion of the proceeds for each series will also fund related costs of issuance. Debt service savings is the State’s ultimate goal for both transactions.
In addition, KBRA affirms the long-term AAA rating, with a Stable Outlook on outstanding G.O. Bonds; the short-term K1+ rating on the G.O. Commercial Paper (CP) Program and G.O. Extendible Municipal Commercial Paper (EMCP) Program; and the long-term AA+ rating with a Stable Outlook on outstanding Master Lease Certificates of Participation (COPs). The COPs long-term rating is derived from the State's long-term G.O. rating and an evaluation of factors discussed in KBRA's U.S. State Annual Appropriation Rating Methodology.
As of January 1, 2025, the State had $6.7 billion of general obligations outstanding, including fixed rate G.O. Bonds and variable rate EMCP Notes. General obligations, including G.O. Bonds, are a direct and general obligation of the State, secured by its full faith, credit and taxing power.
Key Credit Considerations
Credit Positives
- Strength and breadth of the G.O. pledge, coupled with liquidity and market access to support short-term debt.
- Trend of conservative budgets, strong financial results and improved reserve levels.
- Strong liquidity position based on all sources of available cash for operations.
- Essentiality of assets under the Master Lease Program, supported by a strong, well-established legal framework.
Credit Challenges
- Any exogenous event that derails the State’s economic stability.
- Ability to maintain a positive, GAAP basis Total Fund Balance in successive fiscal years.
Rating Sensitivities
For Upgrade
- Not applicable.
For Downgrade
- Material financial weakening, driven by budgetary imbalance over an extended period.
- While unlikely, limited and/or expensive market access to manage maturing CP and EMCP Notes.
- A change in essentiality of assets leased under the Master Lease Program, increasing the risk of non-appropriation.
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